Desiccated Coconut market is very firm due to the following reasons:
1. The major producing countries – Philippines, Indonesia and Sri Lanka – are all coming out of a harsh lockdown which lasted more than 2 months. There was a lot of backlog of orders which they could not ship out during the lockdown. As a result Philippines and Sri Lanka, in particular were not taking any new orders except for shipment August/ Sep/ Oct and later. In addition they were moderating the volumes. So the prices they are asking for for DC (in Philippines) is around the US$ 2200 mark and more. In Sri Lanka, the prices are between $ 2300 – 2400 but SL mills tend to concentrate more on milk, oil and fancy cuts (like chips etc) and are not enthuastic about offering DC.
2. In Indonesia, there are two types of producers – 1. Many fragmented non-accredited (GFSI) producers in far away islands who offer cheap but highly risky products; 2. GFSI mills which offer good quality food safe products but which are few in number. We do not stock the product of the former. We do stock the product of the latter (eg. Tri Jaya Tangguh , Pt. SASL etc.) but these companies are reporting severe increases in cost of production because of a) the requirement of social distancing in producing factories which means they can only operate 70% of their capacity and b) local political compulsion not to retrench workers. In addition there continues to be a shortage of raw coconut nuts in Indonesia which are being diverted to added value products like coconut milk and vco and also to bio fuels.
This trend is likely to continue unless of course a severe recession in buying markets bottles demand. However, please note that global demand for coconut has consistently been around 250,000 mt per annum and this has never fallen significantly in past recessions. This is because coconut is regarded as the cheapest filler in the baking industry in the USA and even Europe. The demand would only be impacted if the price of nut based fillers ( eg. Processed almonds, walnuts, hazels etc.) fell below, which is unlikely.
Our Stock Update and Product Watch in June-July