Copra and coconut oil

Media

Part of The American Chamber of Commerce Journal

Title: Copra and coconut oil
Creator: Igual, Manuel
Language: English
Source: The American Chamber of Commerce Journal Volume XXIV (Issue No.7) July 1948
Year: 1948
Rights
Fulltext: July, 1948 AMERICAN CHAMBER OF COMMERCE JOURNAL 257 even marketable in Manila. “Clear Strips” will take sizes sold here as “Nipa Strips”. “Firsts and Seconds Shorts” will take 2 to 5-1 '2 feet in length, whereas anything less than 6 feet is not accepted in the local market. Export grades in FAS shorts, Common shorts, Clear Strips, and No. 1 Common Strips will take 3 inches and wider for shorts and 2 inches and wider for strips. Anything less than 6 inches wide and between 6 and 10 feet long is clas sified as narrows, shorts, and strips in the Manila market, and the price at which producers have to dispose of these sizes is much less than half their cost of production. The local market will not be put out of these grades and sizes. There always has been an excess production in so called shorts, narrows, and strips which is unavoidable, and with local prices so low, producers will be able to ship at least part of this excess and get reasonable prices for it. Local market prices have remained unchanged during the past month. Copra and Coconut Oil May 16 to June 15 By Manuel Igual General Manager, El Dorado Trading Company, Inc. and Kenneth B. Day President,' Philippine Refining Company IN spite of the several repeated forecasts that copra production would continue low, it would seem that several Pacific coast mills more or less discounted these predictions and continued selling oil for forward positions, in the expectation that Philippine sellers sooner or later would be forced to dump large quantities of copra which, in turn, would enable Pacific coast mills to cover their ■ previous oil sales. Unfortunately, as time went by, it became more and more apparent that the anticipated scarcity of supplies is an absolute fact and the result has been that a very tight market has continued throughout the period from May 15 to June 15, with relatively limited but steady demand for prompt shipments, but with very little buying interest for future deliveries. Insofar as sellers are concerned, the situation in general has been so uncertain that there has been no interest on their part to sell futures until very recently, although most of their offerings were at such high prices that generally trading was practically restricted to spots and nearby deliveries. As a result of this, the copra market was in a confused but generally very tight condition. The American market opened on May 15 with a weaker undertone and while, in general, buyers’ ideas were $310 for May June, sellers were asking $320 to $325, with small sales recorded at $325 for some afloat parcels. On the 21st of May, reports circulated to the effect that arrange ments were being made on behalf of Europe with a view to releasing funds for copra purchases, but it was privately reported that the European Cooperative Administration was prepared to apply all possible pressure to hold France and other nations not to exceed $300 f.o.b. per long ton. This had something of a weakening effect on the market, since European nations more or less corroborated their inability to pay more than $300 f.o.b. With this news, American buyers became more cautious and refused to bid for several days. Philippine sellers later became some what uneasy, as a result of which business was recorded, first, at $320 c.i.f. and later, small trades were reported at $315, although by the end of May, afloat parcels were again sold at $325 c.i.f. During the first days of June, further afloat copra was sold at $330 c.i.f. this marking the highest price during the period. PACIFIC MERCHANDISING CORPORATION John R. Wagner, Pres. 209 Rosario Manila EXCLUSIVELY REPRESENTING...... CORBIN LOCK COMPANY AMERICAN RADIATOR & STANDARD SANITARY CORPORATION NATIONAL CARBON CO., INC. “Eveready” flashlights & batteries LINDE AIR PRODUCTS CO., INC. “Union” Carbide THE PARAFFINE COMPANIES, INC. “Pabco” Products AMES BALDWIN WYOMING COMPANY BALL BROS. MASON JARS WEST BEND ALUMINUM COMPANY MALLEABLE IRON FITTINGS CO. FAIRBURY WINDMILL CO. CAPEWELL MANUFACTURING CO. SLOAN VALVE COMPANY BOMMER SPRING HINGE COMPANY HUBBARD & COMPANY COLUMBUS COATED PRODUCTS CO. KEENEY MANUFACTURING COMPANY BADGER METER MANUFACTURING CO. DICK BROTHERS MANUFACTURING CO. A. B. STRAUB CO. LIGGETT SPRING & AXLE COMPANY STEEL PRODUCTS HOUSE FURNISHINGS GENERAL HARDWARE PLUMBING 258 AMERICAN CHAMBER OF COMMERCE JOURNAL July, 1948 Canada, which up to the present has b£en getting its copra requirements from the Philippines, was able to buy 3000 tons of copra from the Dutch East Indies for ship ment during June July at $315 c.i.f. and while fair publicity was given to this report with a view to influence sellers’ ideas, they did not change an iota. During June, ECA reiterated its previous advice that no European country using Marshall Aid funds would be permitted to pay over $300 f.o.b. and again American buyers became very cautious, and with no demand for coconut oil except for occasional small trades to refiners, buying resistance from both Europe and America finally made itself felt, and we close this period with a rather easy but nominal market, as generally buyers are not bidding although they indicate ideas at $305 c.i.f. per short ton, with sellers generally asking $320 although inclined to consider $315 c.i.f. Despite repeated warnings that the level of $300 f.o.b. per long ton would not be exceeded, sellers were strongly of the opinion that European demands must break loose as soon as dollars were available under ECA and that this demand would oustrip the $300 ceiling indicated by the ECA in Washington. rphat the high coconut oil prices have resulted in a material decrease in consumption, is a well-known fact, as the large American consumers of coconut oil mo dified their formulas to reduce their requirements in favor of tallow, and while ordinarily, when price levels are more or less equal, the quantities of tallow and coconut oil closely approximate each other, a report issued by the Bureau of Census in America gives the following figures, which rep resent the first quarter factory-consumption in soapmakirjg by major soap fats: Greases........................................................................................ 65,198 tons Inedible tallow........................................................................ 135,463 tons Total tallow and greases . . . ■.............................................. 200,661 tons Crude coconut oil.................................................................. 49,576 tons Refined coconut oil................................................................ 23,583 tons Total coconut oil.................................................................... 73,159 tons The foregoing shows that the approximate proportion of greases to coconut oil is now three to one, instead of the usual 50-50. During the second half of the period under review, in anticipation of increased production, Philippine sellers were more inclined to offer futures, July, August and July August September shipment at a slight discount, as com pared to top prevailing levels. Insofar as we know, no business of any consequence was recorded beyond June July, although limited inter-mill business was done for July/August. There were no new sales reported to Europe during the period under review, although moderate volume was purchased for European destinations to fill previous com mitments. Obviously, in the prevailing tight market buyers had to meet American equivalents, despite buying resistance, which means that sales to Europe made during April 15 to May 15, were covered at a loss. A few countries independent of the Marshall Plan were in a position to buy, but in anticipation of lower levels, buying was deferred, 'phe increase in the rates of freight for copra and kindred products, was reviewed by the Associated Steamship Lines at their last meeting, but shippers’ protests were to no avail and the increase was definitely confirmed. ^AVAILABLE IN STOCK FOR IMMEDIATE DELIVERY^ Galvanized Steel Sheets Corrugated and Plain No. 26 x 8 ft. 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DIRECT IMPORTERS 300-308 Sto. Cristo, Manila Telephone 2-81-72 July, 1948 AMERICAN CHAMBER OF COMMERCE JOURNAL 259 'E'xports of copra for the month of May were the lowest of this year, totalling 47,328 long tons, of which there were 36,978 tons shipped to the United States, 7,850 tons to Europe, and 2,500 tons to Canada. Copra ship ments during May, 1947, aggregated 66,821 long tons. HD he local copra market was firm and excited, particA ularly in Manila where supplies were very light. Starting at P63, the market advanced to a high point of P68, only to recede at the end of the period to P62. Prices in Cebu and in other key cities, while somewhat below these figures, were higher at all times than export equiva lents. /'■'oconut oil was selling sparingly at 24-1 2^ f.o.b. Coast or 25^ c.i.f. New York on May 16. The Coast market improved to 26^-and 26-1 2jf, all for spot delivery and only for small edible consumers. Later, however, the market gradually receded, and on June 15 was back to 25^. Mean while, a little spot business was done at 26>i c.i.f. Atlantic Coast, which appears to be the top price paid. Large soapers were still generally not interested and the entire demand came from small consumers for edible purposes. As usual, the business was practically all prompt, forward positions being entirely neglected or heavily discounted. Locally, the price of coconut oil was maintained at Pl. 13 with practically no business done, both because the price was considered too high and because Chinese soapers in general are doing far less business than a year ago. <phe copra-cake market' improved a little and at one A time it was possible to sell limited quantities at $75 f.o.b. for Europe. The Pacific Coast, however, was generally a better market, and business was done as high as $87 per short ton c.i.f. Actual business passing was very little. /'’vf importance to oil crushers was the passage by Congress (R. A. No. 261) of an amendment to Section 189 of the Internal Revenue Code by which the local pro cessing-tax is waived on shipments of coconut oil abroad, thus relieving the discrimination against oil and in favor of copra inadvertently resulting from the 1946 revision of the Code. This legislation, however, cannot be fully effective until such time as coconut oil buyers are once more willing to take on future commitments at prices which will justify meeting daily competition of copra. This time may be a very considerable way off. "D arely had those interested in copra and coconut oil been as confused as they were in mid-June. While pro duction gave indications of gradual seasonal improvement, it was generally felt that the market was still oversold, and that there could be no severe break in prices. On the contrary, although it was generally felt that copra prices have been top-heavy, and lower figures were to be expected the second half of the year, the impression was general that there would be at least one more bulge before the market drifted too far down. It was becoming more and more obvious, however, that apart from the supply situa tion in the Philippines, and the curtailed consumptive demand in the United States, Philippine copra prices in the near future would largely depend upon Europe; and, barring Poland and Czechoslovakia, European buying demand depended on ECA funds and the restrictions placed on the spending of them. At this late writing, it appears that these restrictions are likely to drag the entire market down much sooner and to a much greater degree, than was anticipated in mid-Juhe. 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pages: 257-259