Will currency woes hit Palm oil demand?

Analysts have been predicting that Palm oil would increase in price slightly during the second half of the year as it was likely that production would fall slightly and demand would remain stagnant. But the recent currency issues that started in Turkey might well put paid to that stagnant demand. The concern now is that with currencies devaluing so countries ability to afford such foreign goods will decline. India now already struggling because recent heavy rains could also see their ability to afford Palm oil slip as well. Nearby demand for Palm oil has picked up as traders seek to conclude deals before these currencies issues take hold. But we could see prices dip even further in the coming weeks. Coconut oil price remains fairly stable at the moment as prices hold just above $900 mark. There has been some talk that farmers in the Philippines will not bother harvesting coconut if the price falls any further so maybe adding a floor level to coconut oil.

Desiccated coconut prices have been slipping lower in the last couple of weeks. Oversupply from Indonesia coupled with Sri Lanka mills starting up again have all pushed extra material into the market. Even Philippine prices have been weaker as some sellers have capacity that needs to be sold. However its likely that if prices slip further mills will start to reduce shift numbers to curb extra supply. With such high fixed cost these days selling at a lower price makes little economic sense.

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