As coconut manufacturers and importers continue to play catch-up, external logistics factors including continued and increasing extremes in freight pricing, limited shipping space, and extreme port delays keep demand and pricing high. Below we have provided an update on our products.
Desiccated Coconut
The first quarter of 2021 saw a rise in costs and delivery times for most of the desiccated coconut products as suppliers scramble to fill their 2020 Q4 and 2021 Q1 shipments. As Filipino suppliers play catch up with their existing contracts and increasing demand, freight costs and delays continue to be the overwhelming factor, keeping material costs high.
International freight rates continue to rise, now as much as 140% increase YoY from certain origins. This is causing many suppliers to provide only FOB pricing at this time, with no guarantees of on time arrivals or ship dates. On average, suppliers are still 3-4 months backed up on production. Demand will stay high until Fall, if not through all of 2021, with supply limited and pricing at 5-year highs. Many importers are choosing to go ‘off the market’ on desiccated material through the summer.
What this means to you:
Buyers should be focused on ordering enough supply to last through at least the end of Q3 if possible. Expect pricing to continue to tick upwards through summer due to increasing demand, higher shipping costs and continued supply shortage. Untoasted and Toasted Chips are more stable, while Fine and Medium will remain on shortest supply due to larger volume industrial demands.
Organic Coconut Sugar
Sugar supply continues to be tight yet stable; however, as with all imported ingredients, freight costs continue to be the overwhelming factor. Raw material for coconut sugar continues to lag due to a less than optimal harvest paired with the surge in demand during the pandemic, resulting in minimal surplus/safety stock in the US. The limited availability of shipping containers further exacerbates the problem and will most likely cause the supply to remain tight in the coming months. In terms of shipping space and costs, Indonesia has quickly become the hardest hit origin, with pricing averages increasing 30-40% over the last 2 months.
Pricing also continues to suffer from the US Government’s failure to extend GSP (Generalized System of Preferences) has compounded pricing increases due to supply, resulting in a 5.1% tariff on all imported coconut sugar.
What this means to you:
Buyers can expect to pay higher prices as demand & shipping costs remain high. This will most likely continue through the fall, and perhaps beyond. In addition, extended lead times are to be expected, with freight averaging an additional 3-4 weeks to land at stateside warehouses. Relief will not come until Q4 at the earliest, unless Indonesia sees a surprise increase in empty export-ready shipping containers, and an increase in raw material availability. We advise all buyers capable of pulling material through summer demands do so and anticipate these effects to hang over until 2022.
Coconut Flour
With demands on organic virgin coconut oil remaining high, organic coconut flour supply has remained stable from most origins. Many suppliers are booking contracts through Q4 at this time, at stable rates. As with all items, longer lead times are to be expected with the continued international logistics issues. As a low-cost material, coconut flour also remains the hardest hit from freight increases.
Pricing continues to suffer from the US Government’s failure to extend the GSP (Generalized System of Preferences), resulting in a 9.6% tariff on all imported coconut flour.
What this means to you:
Although pricing is stable, the un-extended GSP along with extreme freight rates have resulted in increased costs on coconut flour which will remain through 2021. We encourage buyers to contract this material through summer, if possible.
Coconut Oil
Like flour, both organic RBD and organic virgin coconut oil supply is becoming increasingly stable, but at a serious premium. The Filipino typhoons of late 2020 have set larger buyers behind, causing increased demand on manufacturers that remain on time and active on production, and have resulted in rates as high +50-60% YoY. US inventory shortages will remain active through fall.
What this means to you:
Although coconut oil remains on the stable side of supply, material is at a steep premium. Freight costs and delays are causing buyers to have no choice but to pay the premiums, which furthers the market’s bubble. We recommend that buyers contract through the summer months on this product, at minimum.
If you have questions about the availability or pricing on any of our organic coconut products, please contact us at hello@thecoconutcoop.com.
