Coco oil exports face slowdown amid competition from palm

The Philippines, the world’s top coconut oil (CNO) exporter, will see a slowdown in its CNO exports in the upcoming market year (MY) as some markets replace it with cheaper imported palm oil and also amid improved copra supply.

Based on the Global Agricultural Information Network (GAIN) report, which was prepared by the US Department of Agriculture (USDA), the Philippines' CNO exports is seen to increase by 14 percent in MY 2017 to 2018, and then it will go up slightly by 3 percent in MY 2018 to 2019.

"For CNO, exports in MY 17/18 are forecast up 14 percent from the previous MY to 1.05 million tons, and should increase modestly by 3 percent to 1.08 million tons in MY 18/19 as a result of substitution of CNO with cheaper imported palm oil and improved copra supply," the GAIn report said.

As of now, CNO is the top Philippine agricultural export. CNO is used as a raw material in making margarine, shortening, and milk fat substitutes and in biscuit and cracker production.

For MY 2017 to 2018, the overall domestic CNO consumption is expected to decline by 20,000 tons from the previous MY to 580,000 tons in MY 2017 to 2018, and remain at this level in MY 2018 to 2019 as a result of substitution for more competitively priced palm oil.

As a result, overall CNO demand was adjusted downwards by 25,000 tons to 580,000 tons in MY 2017 to 2018.

As of March, the average price of CNO in the world market has already fallen below $1,200 quotation.

In the latest report of Philippine Statistics Authority (PSA), the average price of CNO as of March 5 was $1,130 per MT, which was lower than the $1,190 quotation recorded in March 2.