Production:

Philippine SBO production continues to be insignificant relative to overall Philippine vegetable oil production, and is supported almost exclusively by imported beans. SBO output in MY 13/14 was pared down as a result of similar adjustments made to bean crush.

CNO output in MY 13/14 was pared down to reflect reduced copra crush. For MY 14/15, CNO output was pared down slightly, in-line with downward revisions made to copra output. Production is likely to slightly increase in MY 15/16 (compared to the previous year) as the lingering downward pressure on copra production from typhoon Haiyan and the anticipated cyclical decline begins to relent (assuming favorable weather).

Consumption:

No significant change in the overall SBO use level is expected through MY 15/16.

Likewise, industrial demand for SBO is expected to remain minimal through MY 15/16.

Food use of CNO in MY 13/14 was pared down considerably due to the likely shifting away from CNO to cheaper imported palm oil. Industry notes the price premium of coconut oil over palm oil in CY 2014 increased more than five-fold to $448.54 per MT CIF from the price differential of $72.40 per MT in CY 2103. Average CNO prices in CY 2014 were at $1,303 per ton or 47 percent higher than the average CY 2013 price of $888 per ton. Food use of CNO will likely decline in MY14/15 due to the tightening copra supply, but increase slightly in MY15/16 as copra production improves.

CNO industrial use is mainly for oleochemical and biodiesel production. Oleochemicals are mainly used in laundry detergent and personal care items such as toothpaste, soap bars, shower cream and shampoo. Implemented in 2007, the Philippines has a Biofuels Law that mandates the blending of biodiesel and bioethanol in all petroleum fuels sold in the country. Coconut methyl ester (CME) is the feedstock used in Philippine biodiesel production, and is derived from CNO, at a conversion rate of 1:1 (i.e., a kilogram of CNO is equivalent to a liter of CME). According to industry, the current blend is at two percent and at this level, requires roughly 140,000 MT of CNO.

Industrial use of CNO in MY 14/15 is expected to decline from the MY 13/14 level due downward revisions to copra crush. CNO demand is expected to increase slightly in MY 15/16 due to improved copra supply.

CNO feed use was raised in MY 13/14 and is expected to increase modestly through MY 15/16. CNO is the preferred oil used by domestic feed millers as it is a higher energy source compared to palm oil, according to feed industry contacts.

Trade:

SBO imports continued to be minimal in 2014 and are provided in the following table. Marginal increases in imports are expected through MY15/16.

Reporting Countries Export Statistics

(Partner Country: Philippines)

Commodity: 1507, Soybean Oil And Its Fractions, Whether Or Not Refined, But Not Chemically Modified

Annual Series: 2012 - 2014

Quantity

Reporting Country

Unit

2012

2013

2014

Reporting Total

T

37076

35094

39342

Malaysia

T

26743

25877

26653

Thailand

T

3325

5253

8749

Singapore

T

5097

3243

3300

Taiwan

T

1261

378

3

South Korea

T

233

133

259

Argentina

T

74

93

167

United States

T

301

83

159

Others

T

42

34

53

Source: Global Trade Atlas/Exporter Statistics

CNO exports declined 13 percent from 1.04 MMT in CY 2013 to 908,000 MT in CY 2014 based on GTA data. Industry estimates for CNO exports in CY 2014 were modestly lower at 795,000 MT. The United States continued to be the top buyer of Philippine CNO in CY 2013, followed by the Netherlands, according to the GTA.

Philippines Export Statistics

Commodity: 1513, Coconut (Copra), Palm Kernel Or Babassu Oil And Their Fractions, Whether Or Not Refined, But Not Chemically Modified

Annual Series: 2012 – 2014

Quantity

Partner Country

Unit

2012

2013

2014

World

T

866585

1044954

907707

United States

T

366882

444754

417119

Netherlands

T

281886

319616

290826

Japan

T

49775

41317

59134

Italy

T

31400

33500

36501

Malaysia

T

14115

27672

30405

Indonesia

T

27630

49500

21000

Spain

T

23180

24401

13305

China

T

25917

45301

11953

Others

T

45801

58892

27463

Source: Global Trade Atlas/Philippine Customs Statistics

CNO exports in MY 13/14 were raised to 866,000 MT based on GTA importer data. For MY 14/15, exports are expected to decline to 800,000 MT due to the predicted contraction in copra production. Exports are likely to stay at this level in MY 15/16 due to anticipated tight copra supplies.

Significant CNO exports in CY 2014, despite declining production, were likely made possible by increased imports of other oils. According to GTA import statistics, in CY 2014 over 102,000 MT of palm kernel oil (HS Code 1513.29) were imported into the Philippines, mostly from Malaysia. This level nearly quadruples the 26,000 MT palm kernel oil import level in CY 2013. Post forecasts this level of imports to continue through MY 15/16 due to tightness in overall CNO supplies.

Substantial imports of palm oil (HS Code 1511) also likely displaced CNO used for edible oil purposes. Industry cites data from Oil World which shows Malaysian export of palm oil to the Philippines reached 495,000 MT in CY 2014.

The 2,000 MT CNO imports estimate for MY 13/14 is based on GTA importer data.

Stocks:

SBO stocks were pared down marginally in MY 13/14 as overall supply was less-than-expected. Ending inventories are likely to strengthen marginally through MY 15/16 as a result of the growing food demand.

CNO inventories are likely to weaken through MY 14/15, and remain at this level in MY 15/16 primarily due to weak copra production.

Policy:

EO 61 raised tariffs for crude CNO (HS Code 1513 11.00) from 3% to 10% through 2015. However, imports of CNO may be brought in duty-free under the AFTA. Imports of SBO (HS Code 15.07) are subject to a 7% MFN duty through 2015 but may also be imported free of duty under the AFTA.

Palm oil imports (HS Code 15.11) are levied a 15% MFN tariff under EO 61, but are duty-free under the AFTA since January 1, 2010.

Production, Supply and Demand Data Statistics:

Oil, Soybean

2013/2014

2014/2015

2015/2016

Market Begin Year

Jan 2014

Jan 2015

Jan 2016

Philippines

USDA Official

New post

USDA Official

New post

USDA Official

New post

Crush

120

85

135

85

0

85

Beginning Stocks

0

0

5

4

0

6

Production

22

15

24

15

0

15

MY Imports

41

41

42

42

0

43

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

63

56

71

61

0

64

MY Exports

0

0

0

0

0

0

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom. Cons.

4

4

4

4

0

4

Food Use Dom. Cons.

54

48

62

51

0

52

Feed Waste Dom. Cons.

0

0

0

0

0

0

Total Dom. Cons.

58

52

66

55

0

56

Ending Stocks

5

4

5

6

0

8

Total Distribution

63

56

71

61

0

64

1000 MT, PERCENT

Oil, Coconut

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

May 2016

Philippines

USDA Official

New post

USDA Official

New post

USDA Official

New post

Crush

2,350

2,355

2,300

2,310

0

2,375

Extr. Rate, 999.9999

1

1

1

1

0

1

Beginning Stocks

194

194

175

48

0

26

Production

1,480

1,480

1,450

1,450

0

1,490

MY Imports

2

2

0

2

0

2

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

1,676

1,676

1,625

1,500

0

1,518

MY Exports

691

866

800

800

0

800

MY Exp. to EU

350

440

400

400

0

400

Industrial Dom. Cons.

450

450

425

400

0

410

Food Use Dom. Cons.

350

300

300

260

0

265

Feed Waste Dom. Cons.

10

12

10

14

0

16

Total Dom. Cons.

810

762

735

674

0

691

Ending Stocks

175

48

90

26

0

27

Total Distribution

1,676

1,676

1,625

1,500

0

1,518

1000 MT, PERCENT

Note: Calendar year corresponds to the second year of the split marketing year