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The export market for Philippine coconut products is presenting a mixed picture as desiccated coconut prices hold steady while coconut oil and copra continue their downward trajectory. However, industry analysts warn that surging ocean freight rates could soon alter the landscape for European importers.
Philippine suppliers are currently maintaining export quotations for desiccated coconuts at stable levels, though these averages remain significantly below the levels recorded in October of the previous year. On the domestic front, local prices saw a marginal increase last week. Data from the latest T.M. Duché report reveals that June exports contracted by 8.6% year-on-year to 12,301 metric tonnes, with export revenues experiencing a more pronounced decline of 15.9%.
In the European market, coconut oil is facing downward pressure due to a combination of improved copra availability at the origin and tepid demand. This trend is mirrored in the Philippines, where prices for both crude and refined coconut oil have slumped. According to T.M. Duché, as of October 23, average millgate prices were approximately 32% lower than the previous year, while farmgate prices dropped by roughly 35%. This price erosion has led to a significant narrowing of the spread between coconut oil and palm kernel oil.
Logistics remain a critical concern as transport costs climbed for the second consecutive week. The Drewry World Container Index showed rising freight rates in the week ending October 22, with the sharpest increases observed on routes connecting Asia to Europe. For European buyers, these escalating transportation expenses may effectively cancel out the savings gained from lower raw material prices.
To facilitate clear trade, the industry relies on Incoterms to define obligations:
EXW (Ex-Works): The seller makes goods available at their premises; the buyer handles all loading, transport, and risks.
FCA (Free Carrier): The seller delivers goods to a carrier named by the buyer and handles export clearance.
FOB (Free on Board): The seller bears costs and risks until goods are loaded onto the vessel and cleared for export.
CIF (Cost, Insurance, and Freight): The seller pays for transport and insurance to the destination port, though risk transfers once loaded.
DAP (Delivered At Place): The seller covers all costs and risks to bring the goods to a specified address.
DAT (Delivered at Terminal): The seller delivers goods, cleared for import, at the terminal of the destination port.
CPT (Carriage Paid To): The seller arranges transport to the destination port but risk transfers to the buyer upon delivery to the first carrier.
DDP (Delivered Duty Paid): The seller assumes maximum obligation, delivering goods to the destination and paying all duties and taxes.
CFR (Cost and Freight): The seller pays for the carriage of goods to the port of destination, while risk transfers upon loading.
CIP (Carriage and Insurance Paid To): Similar to CPT, but the seller also provides insurance against the buyer’s risk of loss during carriage.
FAS (Free Alongside Ship): The seller delivers goods next to the vessel at the named port; the buyer bears all subsequent costs.
Source: Mundus Agri