Newsbrief 14

For week ending Apr. 06, 2006

UCAP COCOHOUSE LUNCHEON IN APRIL SLATED

Since the second Tuesday of the month falls on holy week, a time when most people take a long holiday break, the Cocohouse luncheon has been scheduled on Wednesday, April 26, 2006. Venue will be the Redwood & Sequoia Rooms, The Richmonde Hotel on San Miguel Ave. cor. Lourdes St., Ortigas Center, Pasig City. For this event, the guest speaker will be Bangko Sentral ng Pilipinas Deputy Governor, Monetary Stability Sector, Diwa Guinigundo. He will talk on the strengthening peso vis-à-vis the U.S. dollar and the local currency outlook for the year. Hopefully, the information will serve as guide to minimize the unintended effects of the peso appreciation on the coconut export industry. Considering the topic for the day, members are encouraged to extend the invitation to their finance officers as well.

NEW PCA CHIEF VOWS TO STEP UP REHAB OF COCONUT FARMS

At last week’s turnover ceremonies, newly installed Philippine Coconut Authority (PCA) administrator, Oscar Garin stressed the need to focus on replanting of old and senile coconut trees and opening up of new areas for coconut planting. He cited the rising demand for various traditional and newly emerging coconut products like virgin coconut oil, coco biodiesel, and geotextile that prompts a significant increase in coconut production.

Administrator Garin, a former congressman representing Iloilo, has been in the coconut business for 18 years. A civil engineer, he established his own company, Garin Enterprises within which he has integrated the use of coconut products in his business operations such as mixing coconut peat with poultry and hog manure to produce bio-fertilizer and use of coconut flour in pan de sal production. He is also into production of virgin coconut oil and coconut fiber products.

PHILIPPINE COCO EXPORT DOWN SHARPLY IN FEBRUARY

UCAP preliminary data indicate export in February this year declined massively from February year-ago. Volume at 92,381 MT copra terms shrank 30.0% from 132,063 MT previously, mainly on account of around 25,000 MT of unshipped coconut oil scheduled for the month which in turn will form part of March shipment.

All major exports but copra meal suffered appreciable year-on-year losses. Coconut oil at 45,592 MT slashed by 28.3% the prior year total at 63,576 MT, desiccated coconut at 7,613 MT squeezed last year’s export of 10,714 MT by 28.9%, oleochemicals as copra at 8,242 MT scaled back previous year’s shipment of 14,584 MT by 43.5%; as opposed to copra meal at 39,076 MT which jumped 34.6% from 29,037 MT.

While this month’s aggregate shipment was remarkably reduced, the cumulative January-February 2006 volume at 271,342 MT copra terms still exceeded comparable year-ago period total of 244,257 MT by 11.1%. Breakdown is as follows, in MT: coconut oil 143,343 (121,326 last year), copra meal 77,325 (48,553), desiccated coconut 13,962 (19,973), oleochemicals as copra 22,227 (20,796).

DESTINATIONS OF COCO OIL, COPRA MEAL SHIPMENTS IN FEBRUARY

The United States was the month’s top market for coconut oil, dislodging Europe which took the lead in the previous month. More than one-half (52.1%) of the month’s lifting equivalent to 23,759 MT went to the U.S. while the European market accounted for 17.5% or 8,001 MT. Japan which ranked third shared 5,572 MT or 12.2%. Other destinations were Korea with 3,500 MT, China with 2,800 MT and Malaysia with 1,960 MT, at respective market shares of 7.7%, 6.1%, and 4.3%.

The month’s export of copra meal was shared just between Korea and Vietnam, the consistent top two buyers. Expectedly, Korea took in a larger volume at 30,892 MT which comprised 79.1% and Vietnam the remaining 8,184 MT or 20.9%.

MASSIVE GROWTH IN VIRGIN COCONUT OIL EXPORT IN 2005

Data from the Philippine Coconut Authority show export of virgin coconut oil skyrocketed by 153.1% in 2005 to 448 MT from 177 MT in the prior year. Corresponding revenue accelerated more sharply by 175.3% to USD1.523 million from USD0.553 million. Markets have likewise expanded to 14 countries from the previous year’s eight.

The United States remained market leader, virtually cornering all of the year’s shipment with 419 MT. Expectedly, market share slightly contracted to 93.5% from last year at 96%. New markets were Ireland, United Kingdom, Germany, Sweden, Canada, Saudi Arabia, Hongkong and New Zealand. Last year, markets outside of the U.S. comprised of South Africa, Korea, Japan, Singapore, Australia, Netherlands and Malaysia; of these outlets only Japan and Netherlands did not register trade in 2005.

... WHILE EXPORT OF COCONUT MILK PRODUCTS WERE LITTLE CHANGED

Export of liquid coconut milk stood at 2,062 MT, about the same volume as year-earlier at 2,056 MT. Earnings, however, declined appreciably by 13.6% to USD2.351 million from USD2.722 million. The United States was the leading destination with volume at 829 MT representing 40.2% of total, trailed by Japan with 781 MT accounting for 37.9%. Quite substantial amount was shipped to Netherlands at 160 MT, Hawaii 62 MT, Jordan 61 MT, and France 57 MT. The rest held volume lower than 30 MT.

Export of coconut milk powder totaled 1,102 MT, lower by 3.3% when compared with year-ago at 1,140 MT. This was worth USD2.923 million, slightly higher by 2.3% over the previous year at USD2.857 million. Top market was Belgium which handled 540 MT, amounting to nearly one-half (49%) of total shipment. Japan was distance behind with 255 MT for a market share of 23.1%. Significant volumes also went to Italy at 98 MT and Taiwan at 67 MT. Other importers took in lower than 42 MT.

... AND NATA DE COCO EXPORT DOWN

Export of nata de coco at 6,004 MT declined considerably by 20% from 7,509 MT a year ago. Income at USD4.391 million similarly dropped by a hefty 19% from USD5.422 million a year earlier. Japan was primary destination with 5,222 MT accounting for 87%. Other substantial importers were the United States with 228 MT, China with 100 MT, Korea 97 MT, Hongkong 91 MT and Australia 54 MT. The rest took in volume lower than 37 MT.

MALAYSIAN COMPANY TO INVEST IN PALM OIL PLANT IN THAILAND

Medan Iklas of Malaysia plans to invest in a palm oil mill in Thailand’s Narathiwas Province. The project cost will be 220 billion ringgits which will include promotion of oil palm farming in the area. Medan plans to rent 160 hectares of land from the Thai government for the project. The company has asked permission from the Malaysian government to export five million oil palm seeds. Narathiwas currently grows oil palm on about 1,600 hectares of land.

GM RULING TO ADVERSELY AFFECT INDIAN SOYBEAN OIL IMPORTS

A new regulation being proposed in India on genetically modified (GM) foods is likely to restrict importation of soybean oil into the country. If enacted, the new law will no longer allow import, manufacture, sales, storage, transport or distribution of any food product containing GM material except with the approval of, and subject to conditions that may be imposed by the Genetic Engineering Approval Committee, constituted under the Environment Protection Act of 1986. Importers of GM foods will have to show clearance certificates.

Soybean oil is one of the imports affected by the proposed regulation since the country buys substantial amount from Argentina and the U.S. whose soybean oil are mostly from genetically modified materials.

LEGISLATION TO RELAX BIOFUEL BLENDING RATIO IN THE NETHERLANDS

A law due to be introduced in the Netherlands next year will require lesser biofuel to be blended with conventional fuel in 2007 than was originally proposed, The Public Ledger reports. The draft law submitted to the parliament will require 2% of biofuel in the blend rather than 3% in the original proposal. Despite the relaxation, the country will still seek to meet the EU’s non-binding target by 2010 of 5.75%.

The Dutch government is seeking to make the blending of biofuel with conventional fuel compulsory in a bid to reduce dependence on crude oil imports. Tax breaks were brought in earlier this year as an interim measure to encourage biodiesel production although there have been plans to abolish them next year. The country joins other European nations like Austria, Slovenia, Sweden and Lithuania that have implemented compulsory blending, while Germany, France, Czech Republic and United Kingdom are also considering such move, the report added.