Huge Flood Of Whale Oil

Now Definitely a Competitor of Most Oil Seeds Effect on Copra Market of Recent Chemical Discoveries

By R. W. Robson, Editor of The Pacific Islands Monthly

The writer made special inquiries recently in London and Europe concerning the present position and future prospects of copra. This is the second article of the series in which his conclusions are summarised. Herein, the effect on the copra market of enormously increased whale oil production, and of certain chemical discoveries, are discussed.

LONDON, January 25.

OF the several factors which have contributed to the present deplorable condition of the copra market, none is of greater importance than the development of the whaling industry by the Norwegians. There has been an enormous increase in production, while at the same time the successful application of chemical science has allowed the use of whale oil to be widely extended.

Consider these figures, which show the world production of whale oil, in barrels, during the last 20 years: 1910 ... 302,900 ... 1919 ... 359,000 1913 ... 805,000 ... 1925 ... 1,044,272 1915 ... 464,300 ... 1929 ... 1,861,877

The year-to-year figures show that up to the outbreak of war production was increasing rapidly. During the war, the industry languished. But, as shipping became plentiful again whaling was revived in the post-war years; and from 1922 onwards, production increased by leaps and bounds, until in 1929 and 1930 it began to profoundly affect the world demand for vegetable and animal oils and fats.

The exact figures for 1930 are not quite ready; but I understand the total production is not very far short of 3,000,000 barrels. This huge oversupply is likely to continue for the moment. A few days ago, one of the best-informed oil brokers in London told me that he calculated that the whale oil that would come into the market in 1931 would considerably exceed the 1930 total. The whalers are

at this moment very busy in the Antarctic; and only this week (on January 20) the following was published in The London Evening Standard: "Wireless reports from the Antarctic announce that a catch of whales, producing over 163,000 barrels of oil, valued at over £679,000, has been made by the Anglo-Norwegian Holdings fleet for the first 14 weeks of the 1930-31 season, ended January 18."

This calculation of the value of the catch is evidently based on an estimated price of £25 per ton, which is ridiculously optimistic. But the report shows, clearly enough, that the flood of Antarctic whale oil is to continue for the present.

Fall In Market Value.

Therefore, the position is that, just at a time when the world is economically sick, and its power to absorb foodstuffs and raw materials has correspondingly declined, the output of whale oil has quadrupled. In the circumstances, the law of supply and demand may be expected to operate, so that the inevitable fall in prices will check excessive over-production. In spite of the development already re-

Since this article was written it has been announced that, owing to vast overproduction, all Antarctic whaling activities on a big scale have ceased and fleets have been withdrawn.

It has been reported, also, that the Unilever Combine has decided to use much less whale oil and much more vegetable seeds oil in their manufacturing operations in future.

ferred to (namely, that chemical science has extended the usefulness of whale oil) the market value of the commodity has fallen tremendously.

When, in 1924, the Norwegians began seriously to comb the Antarctic for whales, the European quotation for whale oil was between £30 and £35 per ton, and some fabulous profits were made. The price was held at around £30 until the end of 1926, and from then on it fell slowly. The average C.I.F. price for 0/1 quality was about £29 in 1927 and 1928; at the end of 1929 it was down to £26. During 1930 huge contracts were made on a basis of £25 per ton; and the whalers, in ever-increasing numbers, went cheerily back to the south. In other words if £25 per ton served only to stimulate their enterprise, what profits must they have been making at £30 and £35 !

Calculations made here by oil brokers show that the nett cost of oil to the average whaling company, provided they get a full catch up to the limit of their carrying capacity, is around £15 per ton.

Some two years ago, the Norwegian whaling companies formed a "conference" — or brutally stated, a union which might regulate the selling price of whale oil. In the latter end of 1929 and early in 1930, this union was successful in selling a very large proportion of its catch at £25 per ton, and the Unilever combine—which is by far the biggest consumer of vegetable and animal oils in Europe—was deeply interested in this contract. But the £25 per ton rate did not hold in the free market. Before the end of 1930, whale oil of first grade was being sold to parties, not affected by the contract.

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as £15 per ton, C.I.F.

I am inclined to regard the generally accepted report that Unilever was caught with the £25 per ton contract for whale oil as a factor of great importance in the copra situation. Unilever, presumably, would buy whale oil at £15 in the free market, in order to get down its average expenditure on whale oil. But whether it did or did not so buy, it certainly would try to improve its average expenditure on raw materials by buying copra at the lowest possible figure. Either way, the copra producer would suffer. This awkward position in the whale oil market must have had a bad reaction upon the copra market in the latter part of 1930.

What Will Whalers Do?

It is understood that the big contracts based on £25 per ton are ended, or about to end, and that the whaling companies are now faced with a price (£15 per ton) that is barely profitable, a definitely falling market, an enormous and increasing over-production.

With the £25 rate finished with, and soap and margarine manufacturers no longer under the necessity of hammering down the prices of oil-seeds in order to keep down their average costs, the copra market may get some relief and report some improvement. But whale oil developments must be carefully watched and studied.

Only yesterday, there came to hand from Norway a report about the efforts the whaling companies are making to stabilise their market. They are, at this moment, holding a series of meetings, and they are trying to get cooperative action to accomplish the following: Keep whale oil production in closer relation to demand.

Arrange “close seasons” in the different whaling areas in turn, so as to prevent the herds falling below a point at which fishing might become unprofitable.

Arrange a scientific investigation of the value of the catches, so that whale products may be put to uses other than the present—which are oil for margarine, soap, candles and cosmetics, meat for human consumption, cattle-food, fertilisers.

In view of the very serious position of the whale oil industry, co-operative action along these lines may be expected.

Character Of Oils Changed.

Until a few years ago whale oil competition need not have kept the coconut planter awake at nights. In the fields where coconut and whale oil were competitive, whale oil was used only for coarser work. In comparison with coconut oil it had definitely an animal flavour, and qualities which placed it at a severe disadvantage. Coconut oil is naturally a hard oil, with a high melting point, which makes it an admirable material for many manufactured commodities.

Whale oil, ground nut oil, and other oils which are now being over-produced are soft oils, and were comparatively useless for many manufacturing purposes. But all that is now changed.

Mr. W. J. Gilbert, present president of the London Copra-buyers’ Association, thus summed it up for me: “Whale oil can now be deodorised and neutralised. A great blow to copra came when they discovered the hardening process for soft oils. Up till then copra had the great advantage that

its melting point was so much higher than that of most other oils. In hot weather, commodities with a base of coconut oil remained where they were.

But when they discovered the hardening process for soft oils, they were able to use many soft oils, where before they had little choice beyond coconut oil. This applies particularly to whale oil —these new discoveries have allowed whale oil to come into several processes and manufactures, out of which previously it was barred because of its softness and its strong flavour.”

New Market Conditions.

The natural qualities of coconut oil give it, for various important manufacturing processes advantages over all other oils; and it is still definitely preferred by manufacturers. But it is no use blinking facts. And one outstanding fact is that manufacturers, by these new processes, can use whale oil and the soft vegetable oils as definite alternatives to coconut oil; and will so use them if thereby they can reduce production costs without impairing the quality of their output.

Otherwise stated, this means that coconut oil will be used generally only when its price puts it on an equality with whale oil and the enormously over-produced oils from soya beans and ground nuts.

To get a hardened, refined oil from whale oil, one must add about £5 per ton to the whale oil price. To obtain a refined, deodorised coconut oil, about £15 has to be added to the copra price.

It is not to be supposed that manufacturers will chop and change about from one class of oil to another, according to market fluctuations. Formulas are far too carefully made, and processes far too delicately adjusted, to permit of quick alterations in the character of the chief material used.

But if a factory moves reluctantly from coconut oil to alkalised ground nut oil or to deodorised and neutralised and hardened whale oil; it is going to move back to coconut oil with equal slowness, even although the price of coconut oil has come down to its competitors’ levels.

Over-production of all oils, at the moment, is enormous, and the market is correspondingly depressed. The world’s economic sickness expressed mostly in its inability to buy—will pass, consumption of these commodities will definitely increase, and prices will tend to improve. But copra will not go alone happily in the future, as it did in the past, practically making its own independent price. The value of copra, in the future, will have an exact relation to the production and market price of other oil-bearing commodities. So long as the world is receiving these floods of soya beans from Manchuria, peanuts from India and whale oil from the Antarctic, the buver will remain on top of the market, and will nearly make his own price.

The question ot whether copra can be profitably produced in competition with these other oil-bearing commodities; the extent to which re-capitalisation of coconut plantations is necessary; and the exact bearing of Unilever domination upon these considerations, will be discussed in the third article of this series, to he published next month. ... ===