Supply remains strong and is poised to continue to remain strong for the remainder the year as crops and operations are fully recovered from drought due to El Nino 2024, with shortages well into 2025. Many mills are now for the most part fully operational and are expected to be running at capacity from April through to October.
Pricing remains high due to continued high demand for Palm Oil and with additional demand for Coconut oil due to ongoing EU deforestation regulation initiatives. Additionally, oil shortage crises due to the closure of the Strait of Hormuz is causing strain on costs due to soaring fuel prices for farmers, operations and logistics.
Shipping:
Current ocean freight rates have seen some increases over the last few weeks primarily driven by increases to bunker fuel. We are expecting rates to continue to increase given the ongoing geopolitical issues, with additional costs to all other logistics to be expected over the next number of months.
Current transit times remain static, ranging 45-60 days.
Things to consider for remainder of 2026:
Although supply remains robust, pricing is not likely to return to levels seen prior to 2025 as fuel prices continue to remain extremely high and demand for CNO continues to remain strong. All current weather predictions point to the likelihood that by summer 2026, we may again begin another strong El-Nino season. If this is the case the effects of drought will be felt through 2027 into 2028.
Given the erratic market conditions over the last number of years, the current state of geopolitical instability, and likelihood of supply shortages starting 2027, we are suggesting customers to continue to look at covering 2026 requirements and begin looking at positions for 2027 where possible.