COCONUT MARKET REPORT 18th January 2024

Last updated: 18 Jan 2024  |  74 Views  | 

COCONUT MARKET REPORT 18th January 2024

Shortages in raw material supply owing to weather persist across all origins. This is further exacerbated by the effects of El Nino in 2023 and it was well known that we would start to see a dwindling in supply in 2024
 
Demand on the other hand has surged for a variety of reasons:
 
  • Massive seasonal demand from the Mid East and North Africa for Ramadhan

  • Large sell off in 2023 of massive carry over stock from 2022 thereby reducing overall inventory at destination markets.

  • Buyers fast realizing that the bottom in the market was in and now rushing to cover purchase of goods as far as they can go with calls even for purchases upto December 2024

  • Buyers buying extra quantities to mitigate against shipment delays that are occurring as a result of the conflict in the Red Sea and the redirection of vessels via the Cape of Good hope thereby increasing transit time as much as 4 weeks from Asia into Europe

In addition to the surge in costs of raw nuts, shippers and importers alike are having to contend with a surge in freight rates particularly on the Asia to Europe / North Africa routes where we are seeing freights in some cases quadruple overnight. The conflict in the Red Sea does not seem to have an end in sight and it would seem that we may have to contend with higher freights for some time. As a result shippers across the board including ourselves are now switching sales to FOB terms
 
Most mills in the Philippines are sold out and only offering April / May shipment onwards. Mills in Indonesia are largely sold out till March and also look to sell April positions.
 
Our considered opinion is that we will see a firm market in 2024. The low’s in the DC market witnessed in 2022 and 2023 are over. Inventory levels are normal and in some cases even low at destination markets and with delayed arrivals due to longer transit times, it will aggravate the stock situation further as well, all whilst raw material continues to reduce in supply which we expect this to be the case uptil at least mid of 2024.
 
We have opined in our prior reports that buyers would be wise to cover their positions ahead rather than face a supply squeeze and price surge. That is something we are already seeing in the market. Our opinion remains the same.

Please let us know how we may assist with your requirements going forward

 

Disclaimer: The information provided in this report in an expression of our considered opinion and in for informational purposes only. Trading agricultural commodities involves risks and readers should do their own research before making purchase decision.

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