Typhoon Haiyan hits coconut oil supply but palm gains limited Wed - TopicsExpress



          

Typhoon Haiyan hits coconut oil supply but palm gains limited Wed Nov 20, 2013 1:55pm IST By Anuradha Raghu KUALA LUMPUR, Nov 20 (Reuters) - Dwindling supplies of coconut oil after a typhoon ravaged top exporter the Philippines could drive buyers to seek alternatives, but price gains in palm-based substitutes will be limited, traders and industry officials said. News of supply disruptions following Typhoon Haiyan, which killed more than 4,000 people and left another 4 million homeless, pushed the prices of competing palm kernel oil PKO-MYSTH-M1 to an 18-month high last week, while benchmark palm oil rose 4 percent. But traders expect gains to be capped, since palm kernel oil has a limited role as a substitute for coconut oil. The rise in coconut prices will definitely help palm kernel oil slightly, but its not really mutually replaceable, said a trader with a foreign commodities brokerage in Malaysia. Domestic Philippine use cannot be replaced with other laurics - they are very particular about using coconut oil. The Southeast Asian country is among the top consumers of coconut oil. It typically exports between 1.5 million and 2 million metric tonnes of coconut oil products a year. Top world buyers include Europe, the United States and India. Palm kernel oil, commonly used as a raw material in the oleochemical industry and to make soaps and cosmetics, has lost 11 percent from last weeks high while palm oil has eased 1 percent so far this week. But palm prices could get a boost if estimates of damage to the Philippines key agricultural export rise. Initial reports show more than 3 million coconut trees have been destroyed by the deadly typhoon, disrupting about 300,000 metric tonnes of coconut oil supply. The areas affected represent more than one-sixth of our total coconut oil exports, Euclides Forbes, an official of government agency the Philippine Coconut Authority, told Reuters. Areas hit by the typhoon include the top-growing regions of Samar and Leyte, home to about 20 million coconut trees. There is a possibility that mills were also damaged in the typhoon, but for now, everything is still in the dark, said Yvonne Agustin, executive director of industry body the United Coconut Associations of the Philippines. Rotterdam coconut oil prices were trading at a premium of about $135 to palm kernel oil on Wednesday, about 29 percent lower than $190 a week ago, but more than double last months figure of $60. Further damage to the Philippines coconut oil output could blow out this spread and prompt government measures to curb exports and help domestic consumers cope with rising prices. It could take several years for coconut oil supplies to be fully replenished. Replanting will start after relief operations are in place and trees will only bear fruit after three years.
Posted on: Thu, 21 Nov 2013 04:55:33 +0000

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