COCONUT oil exports dropped by more than a quarter in the nine months to September as supply of raw material continued to tighten because of the drought that hit major coconut producing areas nationwide, the United Coconut Association of the Philippines (UCAP) said.
UCAP executive director Yvonne Agustin, citing preliminary data, said coconut oil exports reached 472,353 metric tons (MT) in January-September 2016, down by 27.9 percent from the 655,049 MT recorded during the same period last year.
“There is a continued tightness of copra, the raw material for making coconut oil, as a result of the El Nino, resulting in lower [coconut oil]production for the period,” Agustin said in a telephone interview.
In September 2016 alone, exports declined by 3 percent to 77,766 MT from 80,406 MT a year ago. The September shipment volume, the official said, was still within range of the ideal average monthly shipment of 80,000 MT.
During the period, prices of coconut oil averaged $1,527 per MT, higher than competitor palm kernel oil which was priced at $1,409 per MT.
A bigger price difference usually results in buyers shifting to the cheaper alternative.
The industry official, however, said higher prices of coconut oil had little to do with the weak shipment volume, stressing that availability of raw materials remained the biggest concern among coconut oil producers.
“The dry weather condition has been felt in most of the coconut areas in the country. Copra production has been weak since late last year as El Niño strengthened,” Agustin said.
The coconut oil industry is still expected to bounce back in the last quarter of 2016 with the end of the dry spell, as El Niño gives way to La Niña.
For 2016, the industry has set a lower full-year export target of 750,000 MT because of the drought.
“We have yet to see whether we will make an adjustment with our targets. It will depend on the availability of raw materials,” Agustin said.
“Also, the lower prices of palm oil is putting more pressure on other oils like coconut oil,” she added.
In 2015, coconut oil exports slipped by 1.5 percent to 843,710 MT compared with 856,9730 MT in 2014.
Despite weakness in demand, the industry was able to exceed the 2015 shipment target of 804,000 MT.