What’s Really Happening in the Market?

The edible oil market at the beginning of May 2020, like most markets, remains highly confused and volatile.

With the effects of Coronavirus on markets, demand has taken a very different direction, with a significant decrease in demand from the foodservice sector and a big increase in home consumption and therefore manufactures have had to adjust very quickly., without their usual long term logistical planning processes in place. Right now, we still do not know if overall demand will fall or plateau.

Supply of edible oil is likely to be lower as plantations and processing both decrease operations due to lockdowns and social distancing.

Crude Coconut Oil prices are tracking with other edible oils for now, but Organic Virgin Oils with its higher production costs and smaller manufacturing base along with increasing fixed production costs is starting to push prices up, significantly.

We can only speak for Primex Coco Products in the Philippines, but the resilience of all the staff from production, quality control to the office staff has been truly amazing. Despite the known risks, they all continue to work hard to recover production since the factories were closed. Now running around 40% capacity, all staff continue to work tirelessly to catch up.

No production facility is unaffected with some factories only just reopening in the Philippines and some in regions like Sri Lanka still closed. Supply is unlikely to approach normal levels till August, and that’s assuming things continue to improve.

Buyers have shied away from the market as they try to calculate where demand for their products will be in the second half of the year. US buyers are already acquiring up Sept/Oct positions worried about supply forward. European buyers need to take heed before they struggle even more with the supply chain.