Market Review of Dessicated Coconut - June 2018

                In the period of January-December 2017, Philippines maintained its increasing trend of desiccated coconut (DC) export since previous year. The official figure from the Philippines Statistics Authority showed that the export of DC from January to December 2017 was 115,005 MT which was 26% higher than previous year’s volume for the same period. The export volume has been even the highest since 2015. However, the latest data shows that in the first quarter of 2018, export volume of desiccated coconut (DC) declined by 11.6% from 22,410 MT to 19,806 MT. The figure was indicating a reverse trend of DC export from Philippines.

               After experiencing a shortage in supply of raw material due to el nino in 2015 worsened by a series of typhoons, Philippines’ DC production indicated a sign to recover following an improvement in coconut production as favorable weather came. This has enabled Philippines DC manufacturers to fulfill the global demands in international market. The ongoing high premium of Sri Lankan DC prices has also, to some extent, put Philippine’s DC more competitive in the global market. In 2017, America and Europe were still major destinations for DC from the Philippines accounting for more than 82% of the total export. USA was the main destination for Philippines DC in America which absorbed 33,362 MT or 29% of the total export. In Europe, Netherlands was the main hub receiving 14% of Philippines DC. Meanwhile from Asian countries, China, Korea and Malaysia were amongst the largest importing countries of DC from the Philippines.

                In the first quarter of 2018, export DC from Indonesia showed a positive growth of 26%. The growth was following an increasing trend in the previous year. In 2017, BPS-Statistics Indonesia recorded that export volume of DC from Indonesia during the period was 98,038 MT. This was higher by 23.7% compared to the volume of the same period in previous year. The export level was even higher than that of 2014’s volume which was 86,797 MT. An upturn in raw material supply with a lower price compared to other competitors coupled with processing recovery have given a positive signal for Indonesian DC processors to boost their export. It is worth noting that export volume of DC from Indonesia declined from 86,797 MT in 2014 to 85.715 MT in 2015 and again dropped to 79,224 MT in 2016. The decrease was mainly due to a shortage in raw materials caused by unfavorable weather and competition with other coconut products.

                During January-April 2018, Asia and Europe was still the main market for DC from Indonesia. The two regions absorbed 81% of total export volume of DC from Indonesia. In Asia, Singapore is in the main hub for Indonesian DC manufacturers. More than 20% of total DC export sent to or via Singapore. UAE, Iran, Saudi Arabia, Pakistan and Iraq were the other major importing countries from Asia. Europe was the second largest market for DC from Indonesia in the period leading Germany, Russia, Poland, Netherlands, Turkey and UK. The region received 11,588 MT of DC from Indonesia. The third largest market was Africa. Its share of Indonesia’s DC market was 9%. Amongst African countries, Egypt was recorded as the largest importing country. The country imported 4,570 MT of Indonesian DC constituting 6.7% of the total export.

Global demand on DC from Sri Lanka was slowing down following a significant increase in price of the product. In the period of January-December 2017, export volume of DC from Sri Lanka was 29,418 MT or dropped by 40% compared to last year’s volume for the same period. The negative trend continued in the first quarter of 2018. During January-April 2018, export volume of DC from Sri Lanka was 5,362 MT or dropped by 52% compared to the previous year’s volume for the same period.  High price of coconut has pushed DC manufacturers to raise their prices and eventually restrain the global demand. Nevertheless, Sri Lanka was still a key player for DC in international market. Sri Lanka has gradually grown to be a competitor for Philippines and Indonesia as main producing country for DC. In 2016, export volume of DC from Sri Lanka recorded a notable growth of 36% compared to the export volume of the previous year.

 Europe and the Middle East are traditional market for DC from Sri Lanka. In the period of January-April 2018, European countries and Middle East imported 1,802 MT and 1,164 MT of DC from Sri Lanka respectively. The imports of the two regions amounted to more than 55% of the Sri Lanka’s total export of DC. American continent has appeared to become an important destination for Sri Lankan DC. The continent absorbed 29% of Sri Lanka’s total export in the period. USA was the main importing country demanding for 977 MT or 18% of the total export.

Price of DC in the first quarter of 2018 showed a relatively stable trend in Philippines at average of US$2,472/MT. Meanwhile in Indonesia, price of DC was decreasing from US$2,438/MT in December 2017 to US$2,100/MT in April 2018. In Sri Lanka price of DC was still high at the average of US$3,622/MT though showed an easing trend. A prolonged increase prevailed in Sri Lanka when the price soared by 47% from January to December 2017. The increase has put prices of Sri Lankan DC higher than those of Philippines and Indonesia which has made Sri Lankan DC less competitive in global market. Higher price of raw materials, coconut, in Sri Lanka has inevitably pushed DC processor to adjust their prices. In December 2017, domestic price of coconut in Sri Lanka was twice as much as that of domestic prices in Indonesia and Philippines.