Coconut Market Outlook 03/05/2024

Coconut Market Update 03/05/2024

A relentless heatwave is reaching unprecedented levels in Asia. Across the region, Governments are sounding alarms as temperatures soar to hazardous heights.

Thailand for example, is facing scorching temperatures surpassing 42 degrees Celsius, with some areas experiencing staggering highs of up to 52 degrees Celsius. This extreme heatwave isn’t isolated to Thailand alone; it’s sweeping through other key origins such as the Philippines, Vietnam, Sri Lanka and the entirety of the Indian Subcontinent.

This intense heatwave has indeed begun to take its toll on raw materials. Shortages are becoming dire across multiple commodities and origins. We must therefore anticipate that the impact on the 2025 crop will be similarly significant.

Adding to the challenge, we're experiencing substantial delays in shipments both from origin and in transit. Raw material shortages are exacerbating these delays, compounded by disruptions such as the recent Suez Canal blockage. Many shipments are now rerouted via the Cape of Good Hope, adding at least an additional month, if not more, to transit times.

Consequently, spot inventories at destination markets are nearly non-existent. The demand for stock is incredibly high, with goods being sold almost as soon as they're received. This surge in demand far exceeds the available supply, leading to a rapid escalation in prices across all origins.

For instance, coconut prices have seen a dramatic spike since December, with the Philippines only able to ship from August onwards, and Indonesia facing strong demand with limited availability until June. Factory capacities are quickly being claimed, exacerbating the supply strain.

Looking ahead, we must brace for even greater demand as we approach Q3 and Q4, traditionally peak periods. Furthermore, as the natural low crop period for coconut approaches, the strain on supply will only worsen. Considering the present weather challenges, it's prudent to expect a poor 2025 crop as well.

We reiterate our recommendation for all buyers to proactively plan and secure their purchases to avoid stockouts, as many are currently experiencing. We remain at your disposal to assist with your requirements and are committed to serving you during these challenging times.

Source - Jascorp