Happy New Year to all our readers!
Looking back on 2023, we begin this year where 2022 left off:
- Instability in markets persisted due to the on-going war in Ukraine.
- Monetary policy makers around the world would continue to raise interest rates in efforts to best curb inflation, decreasing consumer confidence and behaviours.
- For much of the year, many buyers were still working through surplus inventories left over from 2022 all the while yields from major coconut growing regions remained strong. The year ended with very little disruption as it was a season marked by less than typical storm activity.
- All this contributed to a year of high supply and low demand, keeping prices at unsustainably low levels, as many farmers and mills found it difficult to harvest and operate at these price levels.
- As we begin 2024, we find ourselves in times of ever-growing geopolitical disarray. Not only does the war in Ukraine persist after nearly 2 years, but escalations of conflicts in the Middle East, and concerns of further escalation are adding to fears and disrupting shipping routes.
- A shift to an increase in demand seems to be emerging as 2023 surplus inventories have been depleted, and buyer sentiments seem to be changing. Many mills are forecasting lower supply for Q2-Q4 2024 as lower crop yields seem to be likely due to ongoing effects of El-Nino in major growing regions.
Things to watch for in 2024 Q1:
- Pricing has already increased from the lows seen throughout 2023 but expect additional increases throughout Q1 as demand increases and mills begin to prepare for lower yields expected in Q2-Q4.
- Shipping disruptions due to instability of shipping routes throughout Middle East. Shipping lines are currently re-routing Red Sea shipments incurring additional shipment time and equipment shortages. Look for additional costs and possible delays on shipments as the conflicts persist.
We will try, as always to keep our customers updated with any changes the coconut market faces. We appreciate all our customers and look forward to continued growth for all in 2024.