Coconut oil prices continue to decline

Coconut oil prices continued to decline on account of softening prices of competing oils like soybean oil.

From 27.375 cents per pound last week, CNO prices in the US for February-March and March-April delivery dropped to 26.5 cents per pound yesterday.

According to United Coconut Association of the Phils. (UCAP) executive director Yvonne Agustin, CNO prices have been going down for two months now. Last January, there was not much trade in the US, with buyers willing to buy at 29 cents a pound and sellers willing to sell at 31.5 cents a pound.

In the more active market of Europe, CNO traded a $597.50 per metric ton on the average last week but dropped to $565 per ton yesterday.

Agustin said everybody is still observing whether the downward trend in prices is here to stay or is just temporary, although observers note that there is every indication that prices are not going to improve in the near future.

"It is possible that the buyers still have stocks and therefore are still not buying although we know that stocks right now are low," she said.

The low CNO prices in the US, however, are said to be brought about by the surplus soybean production not only in the US, but also in South America.

The drop in prices is also being attributed to expectations of improvement in production of major CNO suppliers, particularly the Philippines which is the world's largest CNO exporter. While Indonesia is now the largest coconut producer in the world, it consumes much of its CNO output.

Agustin said that from 1.35 million metric tons copra terms last year, they were expecting a 45 percent increase in production this year to around two million metric tons. In 1998, coconut production stood at 2.4 million metric tons, but declined by 42 percent to 1.35 million tons due to the lingering effects of El Niño and La Niña.

"But if El Niño again hits us this year. I don't think we will reach two million tons," the UCAP official said.

In fact, due to be expected onset of El Niño during the last quarter of this year, government is downscaling its agriculture growth target. Agriculture Secretary Edgardo Angara was earlier projecting a 3.5 to four percent sector growth this year, but recently reduced it to between two and 2.5 percent. Budget Secretary Benjamin Diokno, for his part, projected this year's agriculture growth at only one percent.