With raw material costs and freight levels returning to pre-COVID levels, organic coconut ingredients show stabilization and demand increases.
Far enough removed from the COVID era of logistics and supply chain challenges, the market pricing for coconut ingredients appears to be stabilizing, with rates returning to levels seen before the pandemic. However, as demand increases, we advise clients to contract for the next 3-6 months, if possible.
Desiccated Coconut
While Filipino and Sri Lankan suppliers finally show signs of normalization on raw material and production costs and demand, international freight has dropped 50-75% pulling landed costs down over the first 4 months of 2023. However, the interim lows on raw material costs from December/January have already bounced back 5-10% moving into the second quarter.
In attempts to cycle inventory, many larger importers with problematic cost basis inventory have flooded the market with short-coded and discounted materials, providing an opportunity for some, and confusion for others struggling to understand fair market pricing.
The recent relaxation of international freight costs in early Q1 2023 has spurred buyers to step in and contract with the lower rates, balancing out the demand/supply and stabilizing pricing.
What this means to you:
With the relaxed international logistics costs, we strongly recommend that buyers become more aggressive and try to lock in rates through at least July, during seasonally high demand. We are offering discounted contracts on desiccated coconut through July of up to 10% depending on volume, along with short-coded material discounted up to 50%. Please inquire if interested.
Organic Coconut Sugar
Sugar supply continues to be stable, with freight falling but demand increasing; The forecast is for the best international freight rates in 2 years into Q2 2023, returning to pre-COVID levels.
Coconut sugar production is stable, with older stateside material stocked at higher cost basis than fresh imports, creating selling pressure for companies with inventory to clear older material. In response to the recent pricing levels, buyers have jumped at the opportunity, creating increased lead times for fresh shipments from origin. For the first time in 3 years, we are seeing growth in demand again for this material. Increased lead times of 1-2 weeks or even 3-4 weeks for larger spot orders are possible.
As a reminder, the US Government’s failure to extend GSP (Generalized System of Preferences) in 2021 remains active, resulting in a 5.1% tariff on all imported coconut sugar for the near future.
What this means to you:
Pricing on sugar has seen a definite reprieve moving in the late stages of 2022 and buyers have slowly stepped up to lock in reduced pricing. We recommend that all buyers move to contract at the lower rates in case of any quick swing on freight due to underlying international geo-economic riptides, or any surge in demand as we saw in the years leading up to COVID. Slightly longer lead times for larger spot orders should be expected.
Coconut Flour
Organic coconut flour supply is stable from most origins, with product readily available for shipment. Suppliers are booking contracts through Q4 2023 at this time, at stable rates. Despite the significant freight relief, coconut flour is the lowest cost material in the coconut portfolio and therefore remains the hardest hit from freight and logistics increases of the last couple of years.
Some demand for coconut flour has increased of late, as buyers step in at the 15%+ lower landed cost/rates.
The US Government’s failure to extend GSP (Generalized System of Preferences) has also hit all origins on this material, resulting in a steep 9.6% tariff on all imported coconut flour.
What this means to you:
Although pricing is stable, the un-extended GSP continues to burden the cost of coconut flour, and pricing remains above COVID lows despite the freight relief. With pricing getting closer to pre-COVID levels and off nearly 25% from peak, sellers are stepping up to cycle older and higher cost basis inventory. Through Q3 2023, we are offering 10%+ discounts on this material on 10+ pallet contracts through considerations from our supplier-partners to combat the logistics costs; We are also offering discounts of up to 50% on short-coded material. Please inquire if interested.
Coconut Oil
Like flour, organic virgin coconut oil production is becoming increasingly stable. While organic virgin coconut oil pricing has fallen sharply over the last 6 months, Organic RBD continues to be a pricing challenge for larger buyers with the recent years’ legislative bans on palm oil at certain origins.
Like coconut sugar, we are seeing this material increase in demand in response to the lower market pricing and freight rates, further stabilizing pricing. We expect to see stable to small increases in both OVCO and ORBD pricing into the ‘hotter’ spring and early summer months.
What this means to you:
Coconut oil remains on the stable side of the coconut ingredient portfolio, with material now returning to near pre-COVID levels on landed cost thanks to sharply decreasing freight costs. We are recommending that buyers contract or buy material at current costs through at least Q3 2023, with looming international challenges still present and the risk of freight swinging to the upside. We are currently offering discounts on OVCO orders on contracts of over ten totes through June. Please inquire if interested.
Coconut Milk Powder | Coconut Cream Powder | Coconut Water Powder
The Vietnamese origin coconut milk and water powder supply remain on the stable side of the portfolio, with freight falling 50-75% since the start of November.
As Vietnam was one of the hardest hit origins during the pandemic with regard to freight, the recent and sharp decrease is creating fast relief on landed cost for this material. Where possible, we advise clients to follow the trend of ‘cycling inventory’ landed at higher cost basis and restock at current pricing, which may prove to be interim lows.
Demand has seen an uptick, especially for 50% fat organic coconut milk powder, in the last 6 months, as buyers try to take advantage of the lower international logistics costs.
What this means to you:
Coconut milk/cream/water powder continues to be on the more stable side of the coconut portfolio, albeit at a small premium to pre-COVID levels. As the fastest selling ingredients in our portfolio, we recommend that clients contract or order inventory needed within 90 days due to steadily increasing demand over the last 3 years, and adoption of the powders over traditional liquid materials.
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