Copra and coconut oil

Media

Part of The American Chamber of Commerce Journal

Title: Copra and coconut oil
Creator: Igual, Manuel and Day, Kenneth B.
Language: English
Source: The American Chamber of Commerce Journal Volume XXV (No. 7) July 1949
Year: 1949
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Fulltext: VENTURE CAPITAL along with good engineer ing in the selection of promising mining prospects, created the mushroom growth and brought a new major industry into being. That was what unlocked nature’s vaults and brought to light the prospects which later became producing mines. Today, we have lost that combination. There is no VENTURE MONEY, consequently, nature’s vaults remain locked. _____________ Lumber By Luis J. Reyes Philippine Representative. Penrod, Jnrdcn & Clark Com pany LAST month we reported the passage in Congress of H. B. No. 2816 and H. B. No. 2818, the for mer setting aside P400.000 for taking an in ventory of our forest resources, the latter amending Section 1833 of the Revised Administrative Code con cerning licenses for cutting timber for mining pur poses. Both bills were vetoed by President Quirino. In the opinion of the writer, H. B. No. 2816 was a wise piece of legislation that would have enabled, the Government to develop a more comprehensive system of timber administration with the aim of protecting future timber supply. H. B. No. 2818 was intended to clarify certain provisions of the Revised Adminis trative Code. As it is, mining companies are privi leged to cut timber from public forests free of charge even after development work has ended and produc tion started, a privilege not enjoyed by any other in dustry, not even by the lumber companies, which pay for all timber used in their operations from the time licenses are issued to them. Exports for the month of May amounted to 3,114,857 bd. ft., as compared to 2,540,725 bd. ft. for the previous month. Most of these exports, as usual, consisted of Philippine mahogany (tanguile and red and white lauan) of which 59% was sawn lumber, the rest round veneer logs. The May exports included some 250,000 bd. ft. of dao. The United States took about 70% of our exports, the rest went to South Africa, Canada, Hongkong, China, Japan, Formosa, Netherlands East Indies, and Belgium. Prices ranged from about $100 to $130 for the Common grades, f.o.b. Philippine ports, up to $140 to $170 for FAS and CLEARS. These prices are the lowest since liberation and seem to have reached a point when local producers will no longer consider it profitable to cut lumber for export. The quality of ex port stock is much higher than that sold in the local markets, and not only is export stock given an allow ance of 1/8 of an inch for every inch of thickness, but it must also be 60 days dry before shipment is allowed. The records of mills cutting for export show that only from 25% to 35% of their production is of the grade suitable for export. In spite of the low prices, how ever, the demqnd in the United States continues slug gish. Importers continue to be cautious and, lately, reports have been received from the United States to the effect that a shipment of Philippine mahogany was sold at $40 below the current market price, to the consternation of all Philippine exporters! How ever, most producers anticipate a bigger demand and believe that the present condition is the result of the general business recession. Philippine producers realize the need of greater and more vigorous efforts to re-introduce woods in the United States market. Among the measures to be taken is the placing of more advertising in lumber and trade journals. As a preliminary move, two of the older and larger associations have amalgamated and have adopted the name, Philippine Lumber Pro ducers’ Association, the members of which are res ponsible for about 85% of all lumber produced in the Philippines. The new Board of Directors of the As sociation are Antonio de las Alas, President; H. C. Pope, First Vice-President; Carlos Fernandez, Second Vice-President; A. W. Robertson and Tomas Morato, Directors, and Luis J. Reyes and Manuel Diaz, alter nates. IN the local market, wholesale prices were reported at P137 to P140 per M for white lauan and api tong, and P150 to P160 for tanguile and red lauans. At these prices, only those mills advantageously lo cated and efficiently managed can hope to make a margin of profit. Some producers operating under less advantageous circumstances find it impossible to compete in Manila and other bigger markets and pre fer to send their product to smaller centers of popu lation . Reports coming from Korea state that the price quoted by the winning bidder in a tender under SCAP for about 4,000 cubic meters of red and white lauans was $71.00 c.i.f., Fusan, Korea. This is $3.50 higher than the price of the logs sold to Japan earlier this year. On June 9, 1949, President Quirino issued Exe cutive Order No. 221, lifting the ban on exports. This means that anybody may now export timber any where, the only requirement being that the quality and grade must be certified by the Government through the Bureau of Forestry. In other words, all timber exported from the Philippines must be un der a Certificate of Inspection of the Bureau of Fo■restry. Copra and Coconut Oil By Manuel Igual General Manager, El Dorado Trading Company, Inc. and Kenneth B. Day President, Philippine Refining Company, Inc. May 16 to June 15, 1949 E left the last period with buyers gradually backing away from copra at $175 c.i.f.P.C. and $170 f.o.b., all for nearby shipment. Sellers were offering sparingly at about $5 higher, but were playing safe anticipating light supplies in June. The feeling among sellers was that until the heavier crops of July there might be a tight position for prompt deliveries, thus maintaining or improv ing prices. Unfortunately, however, demand for oil and con sequently for copra slacked off alarmingly. While prices maintained fair levels until nearly the end of May, copra was unable to stand the pressure of in creasing surpluses of domestic oils and fats in the United States plus prospects for bumper crops this year, and the record of the first half of June is one of steady decline to the point where by June 15 co pra could not be sold for better than $140 c.i.f.P.C. with sellers as usual asking $5 more. In spite of the fact that supplies actually were light, there was nothing to hold the market up, for European buyers were not interested in Philippine copra, and Europ ean business was chiefly confined to speculators covering in earlier commitments. 294 July, 1549 AMERICAN CHAMBER OF COMMERCE JOURNAL 295 Thus in one month we have a 20% drop in prices, a truly serious matter for the Philippine economy. Sellers for once were not generally caught long, and most of them sold sparingly on the decline and tried to keep in a slightly oversold position. For while hopes of reaction were real, sellers had lost much of their confidence. Nearly all the trading, which was on the whole desultory, was for immediate or early shipment, and what few future sales there were did not reach be yond mid-July. It was generally felt that July for ward copra would sell on a further declining market. Producers tried to stall the tendency by holding off harvesting nuts and making copra, but it was re cognized that this can be but a temporary expedient. All in all as the period ended, the outlook was ex tremely discouraging. WHAT is the trouble with Philippine copra and oil? Immediately after the war, the world was starved for fats, and the Philippine copra crop, lar ly through the efforts of the Copra Export Manage HAPPY DAYS for Jonathan Wainwright and YOU! Jonathan Wainwright and you will both find Pabst Blue Ribbon a pleasant, friendly companion. That fine, real beer flavor was achieved by 105 years of pioneering in the Art of Brewing and Science of Blending. By tasting, by comparing, you’ll see why millions have settled down to blended, splendid Pabst Blue Ribbon. _ _ Blue Ribbon_ _ _ _ _ _ F. E. ZUELLIG, INC. 55 ROSARIO ST., MANILA Hear MUSICANA - DZRH SUNDAYS 9 P.M. 296 AMERICAN CHAMBER OF COMMERCE JOURNAL July, 1949 ment Corporation, was the first large fat supply to be rehabilitated. Thus our copra commanded unheard of prices, for everybody needed it. Times have changed, and more quickly than anticipated. Suc cessive bumper crops in the United States, the reha bilitation of the Dutch East Indies, the French co lonies, and British commonwealth nations, good whale catches, as well as other factors, have brought the world to a point where American supplies of oils and fats are actually greater than pre-war. Europe alone is still below 1941 levels. But Europe is short of dollars, and is depending more and more on supplies from within the sterling bloc. The Philippines can only sell in dollars, and its customers are therefore limited. Consequently, it must rely on the Ameri can market where coconut oil is still selling at 5 cents a pound, excise-tax paid, above cottonseed and soya oils and 10 cents a pound over tallow, which can largely substitute for coconut oil. Therefore, users of coconut oil are buying minimum quantities and await ing the day when coconut oil prices are what they consider reasonable, and more in line with compet ing fats. When that time comes, demand for copra and coconut oil will increase sharply, but there is a considerable and rough road ahead before then. Mean while, the current price-recession in the United States is a contributing factor toward lower prices. Under these conditions copra prices must depend on the oil market, and during our period oil declined, even for prompt delivery, from 14i/» cents f.o.b.P.C. to 12-3/4 cents, with futures selling down to 10-1/2 cents and 11 cents for August delivery. But there is very little oil in the United States today, and conse quently buyers, even on a hand-to-mouth basis, have had to cover immediate requirements with tank-car purchases at premium prices, there being sometimes a spread of 4 cents between spot and future quota tions. This is an abnormal state of affairs and re sults only from the scarcity of spot stocks. Philip pine mills are generally unable to take advantage of spot sales, but must sell bulk tanks for future delivery. But Philippine mills did sell fair quantities of oil for July and early August arrivals at fair but not par ticularly profitable prices. LOCAL markets held fairly firm for copra at about P32 until the end of May. In June, how ever,. both Manila and Cebu prices gradually sank to about a P26 level by the 15th. There was rather more copra available than expected in the Manila area, due to less consumption by desiccators, but the Cebu district remained short, as predicted. For the first time this year, exports of copra in May were greater than the corresponding 1948 month, to totaling 59,604 tons as contrasted with 42,836 in May, 1948, and distributed as follows: United States Pacific Coast ............... 27,813 Atlantic C< a t ............. 1 679 Gulf Coast ................... 3,803 Total ........................... 33,295 Japan ................................................ 500 Europe .............................................. 20,850 Africa ................................................ 4,504 Balboa ................................................ 455 Grand total—54,604 tons Atlantic, Gulf & Pacific Company of Manila FOR 48 YEARS THE GREATEST NAME IN ENGINEERING & CONSTRUCTION ENGINEERS CONTRACTORS MANUFACTURERS SPECIALIZING IN THE FABRICATION AND ERECTION OF BRIDGES, TANKS AND BUILDINGS Operating: MACHINE SHOPS FOR CONSTRUCTION AND REPAIRS' FOUNDRY FOR CAST IRON, BRASS & BRONZE STEEL PLATE & STRUCTURAL STEEL SHOPS MARINE REPAIR SHOPS WOOD PRESERVING PLANT A"oRro"4rioSLO"'t" ®s°"G ‘■WlSi c°- “F CHcor"or4tioBn“",>£ll C°£S"VG hoct com’“pre- brothers. MORSE S F,"oK»;tWG bteel “’oK’h/ “R»ver UISTlduuroits FOB ■ S comXv SEfiv,oe u?aa,v reectrb 3"co&" "» PRo’oucts A0HESJVE equipmeht krp"g I works”N BftAss I »GGK BO v°”< corporation I COMEXECUTIVE OFFICES • ENGINEERING DIVISION STRUCTURAL & MACHINE SHOPS Barrio Punta, Santa Ana, Manila Tels.: 6-75-31 • 6-75-32 MERCHANDISE SALES DIVISION Robert Dollar Bldg., Muelle del San Francisco & 23rd Street, Port Area, Manila Tels.: 2-83-64 • 2-84-82 July, 1949 AMERICAN CHAMBER OF COMMERCE JOURNAL 297 Exports of coconut oil totalled 7,716 tons as con trasted with 2,106 tons in May, 1948, the distribution being as follows: United States Pacific Coast Atlantic Coast ................................ Europe ..................................................... Africa .............................................. 297 5,801 1,115 503 Total ......................... 7,716 tons Copra cake and meal remained steady during the period at $54-55 c.i.f.P.C. and $36-37.50 f.o.b. for Europe. Some small buying interest for Denmark was in evidence as the period closed, particularly for July shipment, but indications from the United States pointed to, if anything, an easier market. Although the immediate market is undeniably narrow, and subject to reaction on the slightest pres sure, if there are any signs in evidence pointing to better prices for copra during the third quarter, they are well hid at present. As long as American buyers are in the driver’s seat, and as long as coconut oil is out of step with tallow and other oils in American markets, it will be hard to move the Philippine crop without serious prices concessions. Undeniably, cot tonseed, soya, and tallow are very cheap. But the tallow production is nearly twice pre-war and these other oils are substantially above any previously known levels. Thus, while these oils and fats may advance, the chances for a decline in coconut oil are better. But, as we have seen so many times, mar kets these days are not governed by logic alone, and it is still highly possible that wholly unanticipated factors may come in, and completely upset the pre sent pessimistic outlook. For the good of Philippine economy, this is something to be hoped for. ON June 13 the copra and coconut oil industries lost one of its most stalwart and experienced friends in the death of Earle A. Seidenspinner, fo merly of the Visayan Refining Company, the Copra Milling Corporation, and the Philippine Refining Company of the Philippines, and in late years, Pres ident of El Dorado Oil Works of San Francisco. He will be missed by a great many of us out here, who have known him and dealt with him for over 30 years. Desiccated Coconut By Howard R. Hick President and General Manager Peter Paid Philippine Corporation THIS report covers the period from May 15 to June 15, during which time copra reached the lowest values since late 1946. This reflects a healthy market condition in that copra is now following fats and oils all over the world. The raw-nut market followed copra steadily and supplies remained quite plentiful, which aided the market decline. Contractors and planters made ef forts to resist the falling market, but they have had to be satisfied with present prices, which, while not lucrative, do provide fair profits and have taken them out of the profiteering class. These new low prices in copra and raw-nuts will certainly affect the economy of the Philippines, and ALLIS-CHALMERS WORLDS LARGEST LINE OF MAJOR INDUSTRIAL EQUIPMENT MOTORS for Dependable Power This squirrel cage motor is one of the complete line of Allis-Chalmers motors — known for their long servic? and high efficiency. All types of motors — wound rotor, direct current and synchronous — are made in ratings from one to 500 hp, and up. They are available in totally enclosed, explosion-proof, or splash-proof models. 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