Philippine Coconut Authority (PCA) Administrator Danilo Coronacion said China wants to augment its vegetable oil supply because of a projected scarcity of the commodity in the Asian markets in the next six months.
Coronacion said Chinese representatives and Philippine CNO manufacturers are currently negotiating on the price and volume that will be shipped to China.
"China is one of our new markets and the industry is preparing how to source these orders," said Coronacion.
The PCA is predicting higher export revenues for CNO this second semester until the first quarter of 2004, with world prices seen hovering within the range of $420 to $500 per MT.
This is a complete reversal of a forecast made earlier this year that CNO prices would skid to $300 per MT in the fourth quarter.
Prices of vegetable oils such as CNO, palm oil and soybean oil are on the rise and the coming winter in North America is expected to increase the demand for these products.
"The supply of other vegetable oils specifically soybean production in North America slowed down because of the humid weather, while a drought is expected to hit the production in Latin America," Coronacion said.
He added that China’s early announcement of its vegetable oil import quota for 2004 is also expected to further bolster prices until March next year.
"The world is scrambling for the supply of vegetable oils and we will be there to fill up this demand," said Coronacion.
The country competes with other Asian countries – Indonesia, Sri Lanka and India – in the exports of CNO.
Local production is expected to hit 2.3 million MT and exports will reach 1.9 million MT this year.
In the first nine months of the year, the volume of Philippine coconut exports rose 16 percent to 1.541 million MT from 1.331 million MT in the same period of last year, with value of exports rising 26.15 percent to $537 million compared to year-ago level of $426 million.
CNO exports reached 362 million MT, up 40 percent from 257 million MT last year, with value rising by 19.4 percent to $854 million from $715 million in 2002.
"Overseas demand for coconut oil continues to increase because European, American and Asian markets are discovering other value-added uses of the product other than its traditional applications in the food, pharmaceutical and soap making industries," said Coronacion.