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Coconut oil prices seen rising to $700 this year
(Manila Standard Via Thomson Dialog NewsEdge)The rising global demand for coconut oil is expected to further push prices to as much as $700 per metric ton before yearend.
"It is inevitable that price will pick up. Supply is expected to be negative for this year," said Danilo Coronacion, former administrator of Philippine Coconut Authority and now president and chief executive officer of Coconut Industry Investment Fund
Global demand for coconut oil is driven by efforts to increase usage of biofuel such as biodiesel from coconut, new capacities, the merging market of Southeast Asia and the growing demand of China and India.
Coconut oil is traded at $530 to $540 per mt, FOB. But prices rose to $580 per mt to $600 (CIF Rotterdam) in the April to May deliveries.
Due to poor harvest and weather conditions, production has been down, resulting to a supply gap of 100,000 mt in the global inventory.
This has pressured the Philippines to come up with increased stock, pulling prices to a higher level. As prices appreciated, copra prices also shot up to P16 per kilo in recent months from P13 to P14 per kl last year.
At the current level of P16.70 per kl, the price of copra has risen to almost P17 and could even go higher, he said.
Pilipinas Kao Inc. and Pan Century have expressed intent to increase production and need an additional 90,000 mt of copra for its operations.
"This will further put pressure on local production. Assuming we'll have a decent production next year, the incremental output may not be sufficient enough to cover the increase in demand," said Coronacion.
The Philippines and Indonesia maintained their leadership in terms of cocnut oil exports, delivering about 84 percent of total world shipments or 1.96 million mt per year--with the Philippines accounting for approximately 56 percent and Indonesia around 28 percent.
During the past five years, output in the Philippines fluctuated widely between a low of 1.27 million mt and a high of 1.76 million mt, with an average of about 1.45 million mt per year. Othel V. Campos
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