Coconut oil prices to stay bullish
By Dominique Patton
12-Mar-2008 - Coconut oil prices are set to stay high this year, pushing
food makers to look at innovative ways of reducing their costs.
Coconut oil, used in margarine, shortening, coffee whitener and popcorn,
has hit record prices in recent weeks, driven by the global trend across
vegetable oils. Strong demand in emerging economies as well as growing
use to make biofuels is keeping supply tight.
Yvonne Augustin, executive director of the United Coconut Associations
of the Philippines, told FoodNavigator.com: "The vegetable oils market
right now is really bullish. Coconut oil has spillover strength from
Coconut oil competes with palm oil as both have the same chemical
composition and high lauric fatty acid content. Palm oil has been
cheaper than coconut oil as it is available in much greater supply,
largely grown on plantations rather than the smallholdings where most of
the world's coconuts are produced.
But with tightening around soy and palm oil, coconut oil began
increasing strongly last year, reaching an average price of $800 per
tonne in November compared with just $536 at the same time the prior
year. The highest CIF price offered for a nearby position on coconut oil
recently reached $1620 per tonne.
The price was also impacted by lower production last year in the
Philippines, the world's biggest coconut oil exporter, and increased use
domestically for both cooking oil and biofuels. The Philippines
government brought a new biofuels act into force last year requiring 2
per cent of all diesel to be made with coconut-based biofuel within the
next two years.
While Indonesian output, the second biggest exporter, was higher last
year, global stocks remained low.
High prices are expected to increase production this year but there is
also rising demand from both the food industry and industrial users such
as the surfactants sector and biofuels.
The Jakarta-based Asia Pacific Coconut Community (APCC) expects demand
in the EU and USA to increase by 4 per cent in the first half of 2008 to
reach 1.3 million tonnes. In the EU, demand from the food industry is
rising faster than the industrial sector, at a rate of 4 per cent each year.
"We anticipate growing demand in the food industry because of trans
fats," said UCAP's Augustin.
There is also high demand in China. APCC predicts the booming economy to
import 13 per cent more than last year during the first six months of
2008 to 74,000 tonnes, mostly for use in food.
As a result, Romulo Arancon, executive director of the APCC, expects
prices to remain "unprecedently high for at least the next six months or
even a full year". He said export prices out of Rotterdam would likely
be in the range of $1,100 to $1,300 CIF over the next year.
Check for earlier Pacific Biofuel posts: http://pacbiofuel.blogspot.com/