Covid-19, typhoons, and rising shipping costs have impacted availability for many of the organic coconut product supply chains our clients use regularly. Below we have provided an update on some of the key products that have been impacted.
Desiccated Coconut
The first quarter of 2021 has seen 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. Filipino supply continues to be hardest hit, continuing to run at 8+ week delays stemming from the typhoons of late 2020. Some suppliers are limiting their offering on certain cuts/grades, especially Organic Medium, resulting in even less availability while demand continues to rise.
International freight rates are also at extremes, as much as 100% increase YoY from certain origins, causing most suppliers to provide only FOB pricing at this time. This market is expected to remain strong for a long time and supply will be limited. This has contributed significantly to the delays on inventory as well as pricing.
What this means to you:
Buyers should be focused on ordering enough supply to last through at least the end of Q2 and even Q3, if possible. Expect pricing to continue to be higher than normal due to less supply, higher shipping costs and continued supply shortage until June at earliest. Fine and Toasted Chips are more stable, while Medium and Untoasted Chips will remain on shortest supply.
Organic Coconut Sugar
As with the desiccated products, sugar supply is also tightening. Raw materials for coconut sugar are still lagging due to 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 continued tight supply in the coming months. In addition, many factories close down for two weeks during Ramadan (which falls in April). Based on past experience, an additional 2–4-week lag on lead time for larger orders around this time is probable.
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. We are cautiously optimistic that GSP will be renewed, by not until end of the year or early 2022.
What this means to you:
Buyers can expect to pay higher prices as demand & shipping costs remain high. In addition, extended lead times are to be expected through May. Relief may not come until summer, unless Indonesia sees an increase in empty export-ready shipping containers, and an increase in raw material availability. We advise all buyers capable of pulling material through May needs to do so.
Coconut Flour
Organic coconut flour seems to be a bit more stable from Vietnam and Sri Lanka. While the Philippines have started offering shipments for Q2, pricing will continue to be a premium to that of pricing coming from Vietnam and Sri Lanka.
The US Government’s failure to extend GSP (Generalized System of Preferences) has also hit all origins on this material, resulting in a 9.6% tariff on all imported Coconut Flour.
What this means to you:
Although pricing is stable, the unextended GSP along with backed-up supply chains from the Philippines have resulted in increased cost on Coconut Flour which will remain through 2021. We encourage able buyers to contract this material through May, when supply chain relief may start to show.
Coconut Oil
Like flour, both Organic RBD and Organic Virgin Coconut Oil supply is becoming increasingly stable, but at a 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 +30-50% YoY.
What this means to you:
Although Coconut Oil remains on the stable side of supply, material is at a steep premium. We recommend that if possible, buyers can contract through the summer months, where suppliers are willing to offer better cost and offset current higher rates.
If you have questions about the availability or pricing on any of our organic coconut products, please contact us at hello@thecoconutcoop.com.
