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.