First of all we wish you a happy, prosperous and above all healthy 2019! Let’s hope this will be a great year for all of us.
Although we are barely in to the new year, we have already begun to collate information from these origins with regard to the DC market and its prospects throughout 2019.
The second half of 2018 in particular would be best described as “cautious”, with most buyers only covering ‘hand to mouth’. Buyers weren’t rushing to buy at depressed market prices, despite a lot of requests for coverage out to the 3Q and even the 4Q of 2019 being there. Of course, buyers see this as an opportunity to cover their long term needs at today’s prices. But producers are not willing to offer forward positions at the same as today’s rates.
Sri Lanka: DC production is almost at a standstill. Some mills are planning to renew production next week while others will recommence production afterward, when demand picks up. The weather conditions that Sri Lanka experienced over 2018 were very favorable. As a result coconut production is expected to return to normal this year, particularly after the 2nd quarter of 2019. On the demand side, with the early Ramadan this year (the Holy month of Ramadan commences from 1st week in May in 2019) overseas demand for coconut of Sri Lankan origin, particularly from the Middle-East countries, will increase in the upcoming months. Sri Lanka producers foresee this will have an upward effect on the prices.
Indonesia: the supply of nuts will be fine until Q2 of 2019. Coconut oil prices stay on the lower side, which will keep the prices low for the next two months at least. The present coconut oil price has already driven the price of raw nuts in Indonesia down to the bottom. If reduced any further, the farmers will no longer have any interest in the planting of coconut trees. Indonesian packers are concerned that if this happens it will disrupt the supply and rates of coconut long term.
The Philippines: nut supplies remain bountiful, and prices seem to have moved sideways for a few months now which suggests a bottom. Although we constantly see a small price blip in the early new year, as the mills start up at the same time and the farmers take a while to start harvesting again after Christmas. There is no medium term nut supply issues, and prices could increase slightly in this period.