As the global coconut market continues to face new challenges and opportunities, it is crucial for manufacturers and buyers to stay informed. Helios Ingredients is pleased to share our latest market insights, which cover the current state of coconut product supply, pricing, and market trends.
Impact of Weather on Coconut Supply
One major factor affecting the current market is weather. The Philippines, a major global supplier of coconut products, has been hit by exceptionally wet weather, which is causing disruptions across the supply chain. Heavy rainfall is hindering harvesting and processing of raw nuts, as well as the resulting manpower shortages are exacerbating supply delays.
Additionally, the Philippines is at high risk of severe typhoons through to the end of the year. These natural disasters could further impact the availability of raw materials, increasing pressure on an already strained market. Manufacturers sourcing from the Philippines should anticipate continued delays and potential price increases as weather conditions worsen.
Shipping Challenges and Costs
In September 2024, shipping rates from the Far East have seen a slight dip, providing temporary relief for buyers. However, the coconut industry still faces significant challenges. Availability and reliability continue to be problematic, with ongoing port congestion and erratic shipment schedules causing delays in deliveries.
Freight rates, though lower than their recent peaks, remain volatile, and buyers must account for the potential of further rate increases as we approach the holiday season. The logistical hurdles in shipping coconut products to key markets such as Europe could impact costs and lead times, making it essential for manufacturers to plan ahead to ensure consistent supply.
Rising PKO and CNO Prices
The coconut oil market has experienced notable price fluctuations in recent months. Crude coconut oil (CNO) prices have risen from $1,544/ton to $1,660/ton CIF Rotterdam, representing a significant increase over a short period. The main driver behind this rise is the sharp increase in palm kernel oil (PKO) pricing, which is closely linked to coconut oil due to their similar applications in the food and cosmetic industries.
The surge in PKO prices is largely a result of supply constraints and increased demand from various sectors. As a result, CNO prices are expected to remain elevated for the foreseeable future, adding to the cost pressures faced by manufacturers who rely on coconut oil as a key ingredient in their products.
Sri Lanka Coconut Market Dynamics
Sri Lanka, another key player in the global coconut market, has seen a sharp rise in raw nut prices. In just one month, prices have jumped from 85,087 LKR per 1,000 nuts to 92,107 LKR. This unexpected surge has caught many in the industry off guard.
The increase in demand, combined with rising prices, has placed pressure on Sri Lankan factories, many of which are now struggling to meet their contractual obligations. Additionally, the strength of the Sri Lankan Rupee ahead of government elections on 21st September has further increased USD pricing.
Factories that have long-term contracts in place are finding it difficult to absorb these rising costs, leading to potential disruptions in supply.
Indonesia Coconut Market Update
Indonesia has also experienced a sudden and unexpected increase in raw material prices. This spike is attributed to the diversion of coconuts to coconut oil (CNO) processors, which has reduced the availability of raw nuts for other uses. The result has been higher prices across the board, with some factories defaulting on their contracts due to the increased costs.
Vietnam Coconut Market Trends
Vietnam continues to offer competitive pricing for coconut products, particularly from fair average quality (FAQ) mills. However, premium coconut processors in the country have shifted their focus away from desiccated coconut (DC) trading to concentrate on aseptic coconut products, which are in high demand globally.
Demand and Availability in Europe
The European market continues to face low stock levels, with large buyers actively seeking to cover their first-half 2025 requirements. However, the availability of coconut products remains limited.
This situation is putting upward pressure on prices, as competition for available stock remains. Manufacturers who have not yet secured their raw material needs for 2025 should act quickly to avoid potential shortages. Early action is essential to lock in supply and mitigate the risks of further price increases.
Conclusion
The global coconut market is facing significant challenges, from weather-related disruptions to rising prices and logistical hurdles. At Helios Ingredients, we are committed to providing our clients with timely and accurate market information to help them make informed decisions.
As we move into the final quarter of 2024, it is clear that supply constraints will continue to impact the availability and pricing of coconut products. Manufacturers are advised to plan ahead, secure their contracts early, and stay in close communication with their suppliers to ensure a steady flow of raw materials.
For more detailed information or assistance with your coconut supply needs, please do not hesitate to reach out to our team. We are here to support you in navigating these complex market conditions and ensuring your business remains resilient in the face of ongoing challenges.