Newsbrief 4

For week ending Jan. 24, 2008

COCOHOUSE?S FIRST EVENT FOR 2008 A SUCCESS

Last Tuesday?s Cocohouse luncheon at La Colina, Valle Verde Country Club, Pasig City was well attended. All of UCAP?s 10 sectors were represented. The event, an opener for 2008, was sponsored by the Philippine Coconut Authority (PCA). Thanks to Ms. Alice Fontecha, Market Development Department Manager, and Ms. Lucy Falcatan, Trade and Market Information Chief who did a good job in making arrangements for the venue, menu and inviting the guest speaker, Department of Agriculture Undersecretary Bernadette Romulo-Puyat.

The members were delighted by the presence of Mr. Alex Yap who gamely emceed the event. UCAP Vice-Chairman Manuel del Rosario kicked off the program by welcoming the Cocohouse members and guests. PCA Deputy Administrator for Market Development Atty. Arturo Liquete, before formally introducing the guest speaker, introduced to her the representatives of the various sectors in UCAP. Ms. Romulo-Puyat, informed the Cocohouse habitu?s that the Secretary of Agriculture and no less than the President know the concerns of the industry and have in fact developed programs to address them. As an aside, she noted that the Cocohouse group is a bunch of closely nit and cheerful people and relatively young as well.

The next Cocohouse function will be sponsored by the brokers? group on February 19, 2008. Mr. Enrique Uy, who represents the group in UCAP, announced earlier during the program that this time it will be a Chinese New Year celebration at Cocohouse for good luck.

PHILIPPINE COCO PRODUCTS EXPORT UP SHARPLY IN OCTOBER ?07

Official figures from the Philippine Coconut Authority show Philippine export of coconut products in October 2007 aggregated 220,470 MT in copra terms. This is a sharp climb by 39.9% from October year-earlier at 157,570 MT. Gross export receipts shot up by a whopping 90.2% to USD138.640 million from USD72.908 million as prices considerably appreciated.

Coconut oil and copra meal were gainers among the major exports, the former posting a massive 48.3% growth year-on-year at 124,490 MT from 83,950 MT. Copra meal rose moderately by 14.0% to 49,428 MT from 43,374 MT. In contrast, export of desiccated coconut fell by 7.3% to 10,217 MT from 11,022 MT and that of oleochemicals lightly slid by 2.8% to 7,071 MT as copra from 7,275 MT. Other products performed as follows, in MT: coco shell charcoal 2,003 (+29.3% from 1,549 MT year-ago), activated carbon 3,049 (+11.5% from 2,734), glycerin 1,422 (+368.4% from 304), fresh coconuts 89 (-47.7% from 114), Others 1,973 (-13.9% from 2,292).

The cumulative figure for January-October 2007 at 1,371,522 MT in copra terms lagged behind from a similar period year-earlier total at 1,706,337 MT by 19.6%. Breakdown is as follows, in MT: coconut oil 703,730 (902,081 year-ago), copra meal 321,438 (373,054), desiccated coconut 110,503 (115,367), oleochemicals as copra 83,643 (96,098); coco shell charcoal 20,828 (21,570), activated carbon 24,212 (28,381), glycerin 13,318 (9,586), fresh coconuts 622 (1,885), Others 23,069 (23,001).

DESTINATIONS OF COCONUT OIL EXPORT IN OCTOBER ?07

Export of coconut oil in October 2007 consisted of 104,429 MT crude coconut oil, 12,603 MT cochin oil (refined and bleached oil), and 7,458 MT RBD oil. The United States was this month?s leading buyer of coconut oil responsible for nearly half (49.3%) of total trade. Delivery at 61,321 MT comprised of 48,740 MT crude coconut oil, 8,500 MT cochin oil, and 4,081 MT RBD oil; US was top buyer of cochin oil and RBD oil during the month. Europe, specifically Netherlands, Italy and Spain, was close second with uptake at 54,653 MT of only crude coconut oil accounting for 43.9%. Netherlands held 39,500 MT, Italy 8,750 MT and Spain 6,403 MT.

Outside of these two major markets, Japan led the pack with 4,531 MT of which RBD oil was 2,600 MT and cochin oil 1,930 MT; followed by Malaysia with 2,000 MT consisting only of cochin oil; and Taiwan with 1,106 MT of which crude coconut oil was 1,035 MT, cochin oil 48 MT, and RBD oil 24 MT. Other importers were China with 441 MT, Iran 279 MT, Russia 82 MT, Pakistan 75 MT. Except for China whose imports were made up of RBD oil at 316 MT and cochin oil at 125 MT, the rest took in only RBD oil.

?DESICCATED COCONUT

There were 38 country destinations for desiccated coconut in October. The United States remained the top market with purchases amounting to 2,510 MT or almost one-fourth (24.6%) of total, tracked by United Kingdom with 1,128 MT or 11.0%. The next five big importers namely Germany 825 MT, Belgium 800 MT, Netherlands 583 MT, Australia 561 MT, and Canada 527 MT, jointly comprised close to a third (32.3%) of the market. Thirteen others also took in substantial volume in the range 102-431 MT and together accounted for 25.7%. These were as follows, in descending order: Poland, China, Brazil, Taiwan, Korea, Mexico, France, Japan, Spain, South Africa, Switzerland, Turkey, and Singapore. Countries numbering 18 and whose imports ranged 12-75 MT collectively contributed 7.4%

?COPRA MEAL

Korea and Vietnam continued to dominate copra meal. For the month of October, Korea imported 23,200 MT which made up 46.9% of total shipment; Vietnam?s uptake at 20,933 MT shared 42.4%. Other markets comprising of Japan with 4,200 MT, Taiwan with1,057 MT, and Australia 38 MT jointly accounted for 10.7%

?AND COCO SHELL PRODUCTS

Japan remained market leader in both coco shell charcoal and activated carbon. Export in October of coconut shell charcoal to Japan at 1,506 MT made up slightly more than three-fourths (75.1%) of total sales. The remaining 24.9% of the market consisted of Korea with 292 MT, China with 160 MT, and Australia with 47 MT.

Japan?s import of activated carbon at 843 MT was 27.7% of total trade during the month. Second biggest destination was United States with 444 MT, followed by Germany 349 MT, France 260 MT, China 246 MT, Korea 139 MT, Ghana 132 MT, and Belgium 107 MT. Fourteen countries with combined share of 17.3% took in much smaller volume ranging 1-84 MT.

DOE TO STUDY BIOFUELS DOWNSIDES

Department of Energy Secretary Angelo T. Reyes is backing moves to undertake further research on the downsides of alternative fuels in response to critical issues raised by experts recently in the country such as fuel crops competing with the food chain. Secretary Reyes, however, believes that the Biofuels Law must be implemented. Though some world leaders opined that biofuels will not be the world?s solution to soaring oil prices, they agreed that it will still be for each country to harness all strategies to explore their indigenous oil and other resources, such as renewable energy.

SRI LANKA ABOLISHED IMPORT DUTY ON COCONUT OIL

The Sri Lankan government has decided to remove all import duties on coconut oil for a period of three months ending March 31, 2008 to address surging local demand. Coconut Development Authority Chairman DJU Purasinghe said demand has outpaced production after the country?s last crop produced lower than expected yields. Mr. Purasinghe said local demand for coconut oil currently is around 12,500 MT a month as against production at only around 5,500 MT a month. As against this, prices have hit record highs of Rs250 ($2.50) a kg. Most of the country?s coconut oil production is used locally. During the first 10 months of this year, edible coconut oil export stood at 1,079 MT compared to 1,449 MT at the same time a year earlier, the customs data show.

U.S. IMPORT OF LAURIC OILS DOWN IN OCTOBER 2007

Data from USDA show the U.S. imported 49,370 MT of lauric oils in October 2007. This is 17% lower than October year-earlier at 59,465 MT. Of the total, 65.5% was coconut oil and 34.5% was palm kernel oil. Import of coconut oil during the month at 32,324 MT increased by 6.3% year-on-year from 30,395 MT, while that of palm kernel oil at 17,046 MT sharply declined by 41.4% from 29,070 MT.

The Philippines supplied the bulk of lauric oil with 28,281 MT of coconut oil which accounted for 57.3% of total; volume leaped 42.3% from year-ago at 19,876 MT. Import from Malaysia stood at 12,089 MT and shared 24.5%. This consisted mainly of palm kernel oil at 10,047 MT (28,071 MT year-ago) and coconut oil at 2,042 MT (7,000 MT). Indonesia contributed 18.2% with 9,000 MT (2,520 MT) of which 2,001 MT (3,519 MT) was coconut oil and 6,999 MT (999 MT) was palm kernel oil.

January-October 2007 total at 568,226 MT slumped by 10.3% from 633,673 MT at the same time year-ago. Coconut oil was 332,961 MT (412,440 MT) of which 83.2% or 277,083 MT (325,954 MT) came from the Philippines. Palm kernel oil was 235,265 MT (221,233 MT) of which 87% or 204,773 MT (178,911 MT) originated from Malaysia.

CHINESE EDIBLE OIL PRODUCERS CONCERNED OVER NEW GOVERNMENT MEASURE

China?s retail prices of edible oil have continued to edge higher at present with no end in sight so far. Prices have appreciated by more than 50% year-on-year basis, leading price rise in the consumer goods market. Prices of soybean oil in 36 cities surveyed hiked 58% on-year in the first ten days of 2008. In the wholesale market of edible oil prices grew 5.97% month-on-month last December.

To stabilize prices on the consumer goods market, the National Development and Reform Commission (NDRC) now requires a report if a seller is to raise prices of certain goods by five percent in a single time, or eight percent accumulatively in ten days. The State Council has set a maximum fine of one million yuan on those violating the NDRC regulation. There have been concerned edible oil producers? margins could be cut as surging prices of raw materials may push up production costs. Producers, however, declined to give figure on possible increase in cost.