Market Update May 17th 2023

The current economic uncertainty in the crude oil market is influencing the trends of the edible oil market. High-interest rates are contributing to this uncertainty, but the crude oil market could improve if interest rates stop increasing during the summer or if they decrease later this year or early next.

The Philippines is a major supplier of coconut oil, accounting for 45 percent of the world's supply, with Indonesia contributing around 22 percent. However, the country only holds a small share of the global vegetable oil market, accounting for 2-3 percent. The prices of other vegetable oils, particularly palm oil, which has a 35 percent market share, significantly impact the prices of coconut oil.

Due to the small share of the global vegetable oil market held by coconut oil, the Philippines' earnings from this industry are at risk of price fluctuations. Researchers from the Philippine Coconut Authority warn that coconut oil prices are vulnerable to global price changes, as the industry lacks bargaining power.

Predictions for the palm oil crop market in 2023 are mixed, with prices expected to decrease due to increased supply in some areas. However, the upcoming El Nino weather pattern may negatively impact crops in other regions.

The desiccated market is currently experiencing weaker demand and well-supplied buyers, resulting in a quieter market than usual. While some larger buyers have made purchases in Q3, mid-sized companies are hesitant to enter the market after experiencing losses last year. High-interest rates are likely to continue impacting demand, regardless of weather conditions.

It is recommended to secure your supply chain as any potential variables may cause price spikes and or weaken the supply.

The thought & recommendation is to secure supply as all potential variables will only cause prices to spike & supply to weaken which is why we are here to secure your supply chain material needs by covering your forecast with us.