Where is the Market Now and Which Way is it Going?

That is the questions of the moment and one that currently is so hard to answer.

Factors that normally affect the price for either coconut oil or desiccated coconut are not relevant now, which makes it almost impossible to predict with any certainty where the market will go next.

If we look at the evidence of what’s currently occurring in the Far East, where the harvesting of raw nuts in all origins has been disrupted.

Sri Lanka production has all but stopped, which means that supply is now very low, and the domestic market is also likely to absorb a majority of what is being produced.

Indonesia has very limited COVID-19 controls in place at the moment, but there is concern that the situation will change and whilst production remains better than most right now, this may not last much longer.

Vietnam had controlled the outbreak better than many with supply available, but it has priced itself at the very top of the market.

The Philippines is still under enhanced controls which are slowing harvesting of nuts and reducing production capacity for those factories that are open. Several of them are still closed or production is so limited, that they are making no new offers at this time.

Edible Oils

Edible oils have been weak since the start of the global pandemic and the recent collapse of crude oil has only added to the weakness. Also, the loss of the foodservice industry around the world has taken away a large part of the market. However, demand from food manufacturers and home consumption are up significantly which may mean the two could balance out.

To summarise, production is down greatly from almost all origins to the point that we need to see if demand outstrips supply for the next month or so. And this is likely to be the real key element.

Will the current level of demand increase or fall away?
Since this has never happened before it’s very hard to tell. Also, the situation is so fluid that we don’t know if food service will stay closed in many countries or regions. When (or should we say if) it does restart, demand could spiral.

For now, short term with supply is limited even with edible oil prices low and it is likely the market will move higher. How much just depends on how much demand outstrips supply.

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