Desiccated Coconut Market Update 21.03.24

Date: 21st March 2024 Category: Latest News
Desiccated Coconut Market Update 21.03.24

Over the past few weeks, it's become evident that the market is under significant strain, growing increasingly complex with each passing week.

Indonesia, in particular, is grappling with substantial challenges. The effects of a drought six months ago are still being keenly felt, resulting in poor nut availability. Consequently, most factories are operating at only 40 to 50% of their usual capacity. Despite having orders booked for nearly 100% capacity, heavy delays in shipments are occurring, leading to a backlog. It's unlikely that this situation will improve before June, meaning that there are still challenging months ahead. However, one small silver lining is that shippers have halted sales for shipments before June, preventing further exacerbation of delays.

Similarly, the Philippines are encountering comparable issues, albeit to a lesser extent. While some delays have been reported, they remain manageable. Due to the problems in Indonesia, the price disparity between Indonesia and the Philippines is minimal, resulting in good sales for the latter in recent weeks. In fact, some Philippine producers are already sold out of fine-grade products through July.

Despite being one of the few origins capable of making offers for April shipments, Sri Lanka poses challenges for most buyers looking to switch. Apart from significantly higher prices, the type of coconut from Sri Lanka differs from that of Indonesia and the Philippines, making it difficult for most industrial buys to transition.

As anticipated, coconut oil prices surged by over 10% last week, further tightening that market. The only slight positive is the marginal decrease and stabilisation of freight rates.

Due to origin delays, there's been a surplus of spot goods in European stocks. Although there's been consistent demand for spot/afloat DC (both fine and medium), the number of sellers is dwindling by the day, which aligns with the delays in shipments from origin.

Overall, it's been quite some time since the market has faced such formidable challenges. The coming months are likely to be dominated by discussions about delayed shipments and pressure from importers to expedite deliveries due to contractual obligations within the industry. With minimal spot material available, the pressure continues to mount.

via Buttner Co