Copra and coconut oil

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Part of The American Chamber of Commerce Journal

Title: Copra and coconut oil
Language: English
Source: The American Chamber of Commerce Journal Volume XXV (No. 4) April 1949
Year: 1949
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Fulltext: 158 AMERICAN CHAMBER OF COMMERCE JOURNAL April, 1949 America and Africa have also cut down their prices, which were already too close to Philippine mahogany prices. Lumbermen feel they need some help from the Philippine Government in the form of reduction of taxes, which is a big item in their pre sent costs, and an appeal is being made to that effect. Many mills have shut down, and unless the situation is improved in the very near future it is feared that many more mills will go out of production. Copra and Coconut Oil By Manuel Igual General Manager, El Dorado Trading Company, Inc. and Kenneth B. Day President, Philippine Refining Company, Inc. February 16, 1949, to March 15, 1949 COPRA and coconut oil markets improved mode rately during the second half of February ow ing to generally better feeling in world markets resulting from the discontinuance of IEFC allocations plus relatively small stocks of copra and coconut oil available in the United States. Beginning the first of March, however, the tremendous surpluses of cot-.tonseed oil, soya, and tallow again made themselves felt and the market dropped faster than it had ad vanced. By mid-March it was at a low point. As noted in our February report, copra produc tion was light and unsold stocks were negligible as of mid-February. Sellers therefore were not inclined to trade except as copra came to market and at advan cing prices. At that time buyers were indicating $185 c.i.f. and $180 f.o.b. without attracting sellers. The market gradually worked up to a point where busi ness was actually done at the very end of February at $195 c.i.f., possibly $200, but no trades at better than $185 f.o.b. were reported for Europe. During this time the CCC stepped in occasionally for round lots on an f.o.b. basis, presumably for Bizonia Ger many, and purchased perhaps 12,000 tons. The French were also buyers but their ideas were around $180 f.o.b. landed weights, not attractive in February. Trading with United States Pacific Coast mills conti nued through February on a guarded basis. No large buying or selling interest was noted. When the mar ket turned in March, buyers followed their usual tac tics of running away from business offered and copra traded sparingly on the way down to a low of $175 c.i.f. with limited sales also made at $175 f.o.b. At the end of the period, markets were very depressed and seemed aimed for even lower levels. It was ob served, however, that at current prices there was somewhat more buying interest, which indicated that the market might be nearing the bottom of the pre sent sag. DURING the first half of March cottonseed oil, soya oil, and tallow slipped off badly, and where as they were in demand at 13%, 12% and 8 cents re spectively at the end of February, by mid-March they were selling 11%, 10% and 7%, cents, approaching pre-war prices. It has become evident that unless export demand for these commodities accelerates, prices must remain low until they are in greater do mestic demand. It must again be emphasized that coconut oil is still far out of line even at present comparatively low levels and that its demand is restricted to minimum Provincial Dealers: VALERIANO ALONZO CEBU • WARNER, BARNES & CO., INC. ILOILO & BACOLOD • FELIX CABURIAN CAGAYAN, MIS. OR. • VISAYAS-MINDANAO ADVT. & PROM. LEYTE & BOHOL • HANSON, ORTH & STEVENSON DAVAO • April, 1949 AMERICAN CHAMBER OF COMMERCE JOURNAL 159 requirements by soapers plus a lessened edible usage. The Netherlands East Indies were offering copra all month and finally sold one lot at $187.50 c.i.f. This copra, however, is a dangerous buy because it is prob able that the President of the United States will soon restore the 2 cents excise tax-differential in favor of Philippine copra, which will make other copra very expensive in America. In European markets, busi ness has been done in sterling currency, with buyers immediately exchanging sterling for American dollars in the gray market of Hongkong at the rate of 3 to 1. A good deal of the selling during the period was done by speculators both in the Philippines and on the West Coast of the United States, which helped consi derably to depress the market as a whole. Because of shortage of supplies of coconut oil, there was some buying interest in the last half of February and sales were reported as high as 15^ cents f.o.b. Coast for scattered immediate tank cars and 161/2 cents c.i.f. N.Y. for bulk. A fair amount of bulk business was done between 15 and 16 cents c.i.f. N.Y., mostly afloat or for prompt shipment. After the first of the month, however, buyers disap peared and preferred to wait the market down, which they were doing successfully at the close of the period, the indicated selling prices at which time were about 15 cents c.i.f. N.Y., with buyers on the sidelines. There was some interest in oil for Germany, where there is no 3 cent excise tax, and a fair amount of this business was done at approximately 15 cents c.i.f. At the close pf the period not too much oil was available, but buying interest was particularly light and there was enough babassu oil available to take the edge off spot demand. LOCAL copra prices in Manila fluctuated up and down, rising from a low of 33 to as high as 41, only to drop back at the close to between 35 to 37 Supplies were very short in February, but were im proving in March, particularly because of shipments received from southern parts. Copra shipments for February totalled 38,655 tons, a substantial drop as against 63,148 tons in Feb ruary, 1948. The breakdown follows: U. S. Pacific Coast and Canada ................ 8,537 U. S. Atlantic Coast ..................................... 5,710 Total .......................................... 14,247 U. S. Total .... 14,247 France ............. 5,050 Denmark .......... 3,000 Italy ................ 3,994 Norway ............ 2,400 Bizone ............. 2,914 Trieste ............. 6,000 Holland*............ 1,050 Total ................................................... 24,408 GRAND TOTAL...................... 38,655 It is expected that March shipments will be con siderably heavier. Oil shipments were again negligi ble, totalling 2,598 long tons consigned as follows: U. S. Atlantic Coast ........................................ 2,107 Italy ................................................................... 491 2,598 Total 160 AMERICAN CHAMBER OF COMMERCE JOURNAL April, 1949 Copra cake and meal markets weakened. There was no real buying interest from Europe, with the best price indication nominally $42 per long ton f.o.b. at the close. Meal on the United States West Coast was down to approximately $62 per short ton c.i.f., which was somewhat better than Europe. As the spring advances, green feeding supplies should im prove, and prices consequently ease. AS the period closed, there seemed to be no strength in either copra or coconut oil, nor were there any indications of support to prices in the United States. On the contrary, in Europe, where the excise tax is no factor, Philippine copra was still the cheapest copra in the world, and far more rea sonably priced for European buyers than for Ameri cans. Should American dollar allocations permit, wholesale European copra buying during the next quarter might help support the market, but it is pre dicted that most of these dollars will be largely re stricted to the purchase of American domestic fats. Export demand for Europe in any form is, nonethe less, a very important factor at this time. The market has dropped to such an extent that a turn sooner of later is inevitable. But when this turn will come nobody can estimate with assurance, and we may w’ell see lower prices before then. It would be surprising, however, if the market should suffer any major collapse at this time, and the chances favor a series of dips and rises in ever-narrowing cycles. But, in view of their vulnerable position, coconut oil and copra are in a very delicate situation, and may easily be upset either way. Desiccated Coconut By Howard R. Hick President and General Manager, Peter Paul Philippine Corporation THIS report covers the period from February 15 to March 15. During this period copra prices firmed up and continued to rise until early March when buyer resistance outside the Philippines proved stronger than local conditions. A shortage of copra locally was responsible for an increase in prices, but world conditions are such today that buyers are not affected by local conditions as they were six months ago. This observation has been the healthiest sign in the copra and desiccated coconut industry since the war, pointing toward more equitable buyer-seller re lations. Raw coconut prices closely paralleled the copra prices throughout the period, and with the coming season of more plentiful harvests and easier procure ment, nut prices may go under equivalent copra values. Severally, factories have curtailed production during the first quarter of this year but will soon re sume normal plant capacity. The Red V Coconut Products, Ltd. has had some labor difficulties and al though shut down for a short period the differences have been compromised and it is now operating on schedule. The shipping statistics for the month of Feb ruary are as follows: ENGINEERING EQUIPMENT & SUPPLY COMPANY, Inc. 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