Coconut Market Update July 21st 2023

The costs of edible oils decreased during the first quarter of this year due to increased interest rates from central banks, which has affected demand.

This has also caused doubts about whether demand will continue to grow, especially as El Nino has begun to affect global weather patterns in many areas.

However, recent inflation data suggests that interest rates may soon peak, and with higher than anticipated export numbers for Palm Oil, prices have begun to stabilize. While they are not yet at their yearly high, the trend is upward.

Additionally, unfavourable weather conditions worldwide have led to an increase in the price of Soya, which is also on an upward trend. This could indicate that prices will continue to firm up for the remainder of the year as El Nino has a greater impact on the supply side.

The cost of olive oil has reached an all-time high due to the hot and dry weather conditions that have adversely affected olive crops in Southern Europe. Spain, the largest olive oil producer globally, experienced a particularly poor harvest this year, prompting officials to call for urgent action to address climate change, resulting in drought, heatwaves, and water shortages that have impacted production.

This week Russia announced the suspension of its participation in an agreement that allowed Ukraine to transport its grain through Russian ports located in the Black Sea. This decision has disrupted an important agreement that previously helped to prevent a global food crisis. Unfortunately, this move by Russia has the potential to impact food prices and contribute to food insecurity around the world.

Ukraine is known as "Europe's breadbasket," as it contributes around 10 percent of the world's wheat exports and almost 50 percent of the global supply of sunflower oil. The majority of Ukraine's grain exports, approximately 90 percent, are shipped from ports located on the Black Sea which are now being targeted by the Russian Military,

The prices of coconut oil and desiccated coconut have remained relatively low because of a consistent supply.

The effects of El Nino have yet to be felt, and the Philippine Typhoon season shouldn’t begin until September. Buyers are taking advantage of these low prices by purchasing as far in advance as possible.

This has led to a shortage of immediate supply. However, buyers are struggling to predict demand for the second half of the year as people face increasing costs of living and debt, resulting in potentially lower demand.

It’s a delicate balance between having enough inventory and having too much. It could just be a matter of time before prices rise.