Coconut prices have hit record levels, with fears that there are further increases to come. Medium and fine desiccated coconut is now selling for up to £2,000/tonne against a historical average of £1,000/tonne. Prices have increased beyond levels thought possible, said Mark Setterfield at ingredients firm RM Curtis, prompting companies such as Lees Foods to warn of a possible future impact on its business (see news, page 11).
According to Setterfield, there has been high demand for coconut oil from those using it for manufacturing, as well as the biofuel sector. And because the coconut oil market has gone to record high levels, the dessicated market has followed.
Setterfield said buyers had waited to see if prices would come down, believing the levels were unsustainable, while the number of people bringing in surplus stock had reduced; with most coconut coming from the Philippines and Sri Lanka, there is a lead time of up to six weeks. Other contributory factors include the weak pound against the dollar and increasing speculation in commodities.
Said Setterfield: "January and February are usually very quiet, but buyers are now coming in and having to pay those higher prices. The bubble will burst some time and, like any commodity, there will be a market correction, but in the short term, prices could increase further."