As we have closed out 2024, the effects of the El Nino Season that extended from last half of 2023 through the first half of 2024 have been fully realized. In many regions, coconut yields have been halved in their bunches and in their size. Forecasts project the effects will be felt through Q1, as such supply shortages are likely to extend into 2025 Q2. In Q4 2024, SE Asia experienced several typhoon related events, causing even more of a strain on an already tight supply. Typhoon season is nearly over as it usually ends December, however, the last major storms that hit Philippines have come at the end of the year. We continue to monitor as any further disruption to supply would be devastating.
The end of 2024, also saw the closure of one of the world’s largest manufactures of desiccated coconut and coconut products. Currently it is unknown as to when this supplier will reopen. Given the void left in the market, many customers are scrambling for supply, the reverberations of this impact will be felt through the better part of 2025.
2024 also saw increased demand. The increased demand coupled with supply issues as outlined above have created a climate of unprecedent price increases over the last few months. Crude coconut oil prices are approaching USD2000/MT, nearing record highs. We are not expecting price levels to lower anytime through 2025 and may even see further price increases given the current climate in the market.
Shipping has seen decreased demand through Q3-Q4 of 2024. As such, lower rates were sustained through the last half of 2024. Given the lower demand, there were some blank sailing disruptions as well some additional delays due to storm disruption. As we approach Chinese New Year, we have begun to see, as expected, increased demand. Rates should follow accordingly over the next 2 months. Current transit times are between 40-60 days arrival from ship date.
Things to watch for in 2025 Q1:
The effects of 2023-2024 El-Nino season have proven to be deep and long lasting. We anticipate coconut yields not to start improving until 2025 Q2, at best. Along with increased demand and the uncertainty surrounding the closing of a major manufacturer of coconut products, supply is likely going to be a challenge moving through 2025. Expect pricing to remain high through much of 2025. Many are suggesting that pricing may continue to rise through the first half of 2025. We are likely to see increased demand for shipping over the next few months. Transit times should remain static. We are also looking out for implications of any changes to tariffs on shipping as well as the potential of any pending supply-channel related strikes.
It's going to be an interesting year, to say the least. Keep coming to Klassic with your inquiries and we will continue to do everything we can to service you, our customer.
To end off, thank you for a wonderful 2024! We value you, appreciate you and look forward to great things ahead.
Happy New Year!