GLOBAL shipping problems have forced the country’s exporters of coconut oil (CNO), one of the Philippines’s prized agricultural commodities, to book vessels a month ahead of shipments to ensure that their contracts abroad are fulfilled.
In an exclusive interview with the BusinessMirror, the Philippine Coconut Authority (PCA) said CNO exporters are booking their shipments in advance—about two weeks to a month before target shipment date—as a “stop-gap” solution to the ongoing global container and vessel imbalance.
PCA pointed out that the impact of these problems were “greatly noted” in July last year when the country’s CNO exports “dropped to its lowest” at 7,863.15 metric tons (MT).
“With this problem, to be able to deliver the goods as per agreed contract, what our exporters do is to book their shipment with the shippers in advance, two weeks to a month before the target shipment date,” said the PCA, an attached agency of the Department of Agriculture.
The PCA disclosed that the Department of Trade and Industry is already looking into the problem and is looking to come up with a solution to mitigate the impact of the problems on one of the country’s top agricultural exports.
“The Committee on Logistics of the Export Development Council of DTI has been conducting consultation meetings with the exporters, shipping and logistics companies to minimize the impact of this problem to our exports. Advance booking is still the stop-gap solution at the moment,” it said.
The BusinessMirror broke the stories that the global container and vessel imbalance are hurting the country’s exporters as they experience delays in shipments, which results in reduction in profits.
The ongoing global logistical problem adds another problem to the country’s CNO exports that has been suffering from supply problems in recent years.
In fact, Philippine Statistics Authority (PSA) data showed that the total value of the country’s CNO exports last year declined by 9.1 percent to $846 million despite a rebound in prices.
World Bank Commodities Price Data or The Pink Sheet showed that the global average price of CNO last year recovered to $1,010 per metric ton from $736 per metric ton in 2019.
PCA explained that the “lesser supply of CNO in the global market” caused the rebound in the export prices of the commodity.
“The decline in CNO exports value in 2020 compared to previous years, despite the increase in price, was basically a result of the low volume of CNO exports,” it said.
“The overall decline in volume was caused by two major factors: 1) the effect of the Covid lockdowns causing mobility restrictions in the first semester; and 2) the effect of the series of strong typhoons in the second half of 2020,” it added.
The Pink Sheet showed that the average monthly quotation for CNO is sustaining its upward trend this year, reaching an average of $1,578 per MT in March, the usual price level the commodity had about four years ago.
The global price of CNO started to tumble in 2017 due to the world vegetable oil supply glut. The Philippines is the world’s top CNO exporter.
“CNO is the second most expensive vegetable oil in the world next to olive oil despite the fluctuations in prices,” the PCA said.
“However, as it only accounts 2-3 percent of the total vegetable oil supply in the global market, its price is greatly affected by the overall supply and demand situation of vegetable oils particularly by palm oil which accounts for 35 percent and soybean oil at 29 percent,” the PCA added.
A Global Agricultural Information Network (Gain) report projected that the country’s CNO exports in market year 2021-2022 will continue to decline for the third straight year due to “logistical problems from importing countries as a result of the Covid-19 pandemic.”
The report noted that the country’s top markets for its CNO are Europe and the United States, which have been reeling from the impact of the global shipping problems.
The GAIN report, prepared by the United States Department of Agriculture Foreign Agricultural Service in Manila, estimated that CNO exports from October-to-September of next year would decline to 875,000 MT from 925,000 MT recorded in the previous market year.
The GAIN report added that the United Coconut Association of the Philippines expects total CNO exports for calendar year 2021 to reach “roughly 875,000 MT.”
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