Coconut oil jumps at Euro opening
Coconut oil jumps at Euro opening
LONDON (Reuter): Coconut oil prices jumped by around US$15 a ton at the opening of the European vegetable oil market yesterday on renewed fears over supplies of coconut oil from the Philippines following the havoc wreaked by typhoon Angela.
"People are talking in terms of force majeures, none have been declared yet but people now see them as a real possibility," said a trader.
Traders said they were getting reports of mills shutting down due to a lack of electricity as well as a shortage of copra reaching them.
"There is talk that some mills could be out of action for up to two months owing to a power shortage following the storm," said another trader.
Traders said there was some concern over fob contracts linked to CIF contracts.
"If someone has a deal going on the fob market linked to a cif contract then they have got to find cover from somewhere and I think that is what is behind this morning's surge in prices," said a trader.
If players can't fulfill contracts with coconut oil from Philippines they will have to buy oil from Indonesian.
"All coconut oil contracts are on the basis of Philippine or Indonesian oil so that in itself isn't a problem, finding the oil at a reasonable prices is," said another trader.
Traders said another alternative would be palmkernel oil which although not quoted at the opening in Europe this morning has been firming over the past few days.
However, some traders are still expressing doubts over the extent of the damage.
"We see our screens, but when we talk to our people out in the Philippines they say things are not as bad as we are being lead to believe," said a trader.
"I think some people are trying to pull the wool over our eyes, but you can't blame them for trying to push the prices up," said another trader.
"However, some of the things we are being told just don't add up," he added.
In early trading December/January coconut oil fetched $765 and $770 and January/February $760 and $762.50 a ton cif between $10 and $15 above the last reported trades on Tuesday.