Coconut Oil Products

American observers are optimistic that coconut oil products will have little lasting impact on a market that has otherwise exhibited recent signs of strength. "If anything," says one observer, "the basis for the recent upswing in pricing was merely psychological."

Brokers suggest that the pricing adjustment was long overdue. "Coconut oil was underpriced in comparison to other vegetable oils. I think these typhoons are an impetus to get the pricing back up to where it should be," says one.

"The typhoons triggered this price jump," another adds, "but even without the weather problems, I think people would have discovered that this year's supply of copra hasn't been quite as good as anticipated," another adds.

By all accounts, coconut oil brokers have been enjoying strong US demand for their products. US imports of coconut oil during the period October 1992-August 1993 are considerably higher than comparable figures from a year ago. US Department of Agriculture estimates that 486,668 metric tons of coconut oil were imported, up from 338,874 metric tons last year.

USDA data point to several factors behind this sizable jump. According to information provided by the department's foreign agricultural service, ending November prices for coconut oil are down 26 percent from last year. And cheaper coconut oil has led some palm kernel oil customers to substitute the more economical oil in their formulations.

Palm kernel oil pricing is reportedly moving in tandem with that of coconut oil. Current estimates place palm kernel oil, c.i.f.. US ports, around 30c. per pound. "The market looks pretty strong," one broker concludes. "We may see the crude coconut oil price drop by a few cents, but I think a price range of 33 to 36 cents will prevail in the coming weeks."

Cottonseed oil pricing has improved in recent weeks, and observers call the price increases a direct result of strong domestic demand. Although early autumn indicators suggested that crude cottonseed oil would remain near 25c. per pound well through December, pricing began outdistancing these estimates early in November. Then trend has continued, and the going rate now hovers above 30c. "Supply is tightening," adds one broker, "so there's a good chance prices will be moving higher."

One cottonseed oil exporter reports that the international market is proving somewhat more problematic. "The government is telling Central American buyers that their cotton oil bids are too low. If the COAP Cottonseed Oil Assistance Program situation doesn't improve, there's a good chance that foreign consumers of prime bleached summer yellow cottonseed oil could increasingly turn to alternative oils."