Coconut Oil Prices Spike

Coconut oil prices have surged over the past year in contrast to the general downward trend in other vegetable oil prices. That has resulted in a premium approaching 60 percent over palm and soybean oils.

Typhoon Haiyan/Yolanda hit the Philippines in November, which exacerbated lready tightening supplies in this country, the world’s largest coconut oil exporter. Consequently, the market roiled with concerns over excessive damage to coconut palms and the potential to constrain supplies.

However, the current price reaction has been more muted than the last spike in 2010/11, because this time the weather damage was only in the Philippines, and its export market share is much smaller. Furthermore, the supply of other vegetable oils is larger now, allowing consumers to substitute for more available and cheaper alternative oils.

OVERVIEW

Global soybean production is down following reduced crops in Brazil and Paraguay. Soybean trade is lower as a decrease for Paraguay’s exports only partly offset an increase for the United States.

With larger exports, U.S. supplies are tighter, contributing to an increase in the season average U.S. farm price.

SOYBEAN PRICES

U.S. export bids, FOB Gulf, in January averaged $541 per ton, slightly higher than last month, supported by continued strong foreign demand, largely from China.

As of the week ending Feb 27, U.S. soybean commitments (outstanding sales plus accumulated exports) to China totaled 27.8 million tons compared to 21.3 million a year ago. Total commitments to the world are 44.2 million tons, compared to 35.0 million for the same period last year.

2013/14 TRADE OUTLOOK

• U.S. soybean exports are boosted 544,000 tons to 41.6 million on continued strong sales and shipments to-date.

• Australia’s rapeseed exports are boosted 100,000 tons to 2.6 million on a larger crop.

• China’s rapeseed imports are up 100,000 tons to 3.4 million reflecting strong demand.

• European Union’s palm oil imports are raised 300,000 tons to 6.1 million in response to strong demand in the industrial sector.

• Indonesia’s copra meal exports are cut 100,000 tons to 300,000 on slower shipment pace and higher domestic use.

• Paraguay

o Soybean exports are slashed 1.5 million tons to 4.3 million driven by a reduced crop and increased crush.

o Soybean meal exports are raised 450,000 tons to 2.7 million on stronger global demand.

o Soybean oil exports are up 120,000 tons to 620,000 on larger supplies.

• The Philippines’ coconut oil exports are reduced 100,000 tons to 850,000 on reduced crush.

• Taiwan’s soybean imports are down 100,000 tons to 2.4 million reflecting reduced supplies from Paraguay.

• Ukraine’s sunflowerseed exports are lower 100,000 tons to 200,000 on a slower than anticipated export pace