Copra
pp. 9-10 · Read in the full issue
Some Factors Which Affect World Markets
By F. W. Burke. Orokolo, Papua
NOW that the European situation is more settled, those interested in copra begin to ask; When will the price of copra rise, and what will it rise to?
There is no subject discussed half so much in the Islands at the present time, and one hears all kinds of conjectures.
But it is still a mystery to many, why the price of copra has fallen to such lev els. First the American oil-tax was blamed; then the American depression: then the European situation. Unilever can always be blamed, when nothing else can be thought of.
The European situation is settled, the Americans are struggling through—yet the recovery in the security markets has as yet had little effect on the fat and oil market.
However, by making a study of the reports issued by the U.S. Bureau of Ag ricultural Economics, and those of the British “Industrial Chemist”, one can see the trend of the copra market. The most important and significant trend in 1937-1938 was the swing from coconut oil to a palm kernel oil, and the shift from tallow to palm oil.
According to the Bureau’s report, 112,- 000,000 lbs. of palm kernel oil were used in the soap industry alone, as compared with 26,000,000 in 1936-1937. This sharp advance directly paralleled a drop in the consumption of coconut oil. Whale and fish oils continue to replace other soap making materials, the production of tal low has considerably increased, and the stocks of hogs for slaughter are larger than the supplies of last year. Stocks of grease were larger than in any of the three preceding years.
Production of domestic vegetable oils has been very much higher in the last crushing season, due to the large cotton seed crop and record supplies of vege table foods. Supplies of whale oil on hand are larger than have been the case in recent years, and it is probable that in 1939 more whaling will be car ried on under the American flag than has been done in recent years. If the whaling season proves to be a good one, production will continue to be on the high level of 1937-38.
Reports on imported oils indicate ex ceptionally heavy arrivals of copra in the United States and Cebu, and an unusually good crop is expected for the year, unless low prices discourage pro duction. Stocks of coconut oil on hand were twice as large as a year earlier, and were the heaviest on record since 1934; and. as consumotion has fallen, there is every indication of a further in crease in stocks.
Coconut oil was a very important fac tor in the production of glycerine during warfare, but the synthetic process of manufacturing it from sugar is now so perfect, and cheap to produce, that the Japanese have large stocks ready for ex port over and above that required for their own use in the present conflict with China, and it can be shipped for less than the cost of extracting glycer ine from coconut oil.
Another factor is a new and serious competitor to coconut oil—namely. Babas su oil, because of its close resemblance to coconut oil, has attracted attention as a substitute for coconut, but only during the past year or so. The oil is
produced by crushing the nut of the Babassu palm, which grows wild in Bra zil in great abundance. The Babassu kernels yield 65 per cent, of oil.
The production of Babassu oil to-day is small, and is yet only a minor com petitor of coconut. Production, however is being encouraged by the Brazilian Government, to meet the ever-increasing demand for the oil. It is reported that thousands of tons of Babassu nuts rot on the ground every year in Brazil, and so this industry, fostered by the Brazil ian Government, appears to be a poten tial tonnage competitor of coconut in the years to come.
As to the future prospects of the oil and fat market, statistics indicate that larger stocks of oils and fats will be available. This outlook apparently ac counts for the present low prices of fats and oils, and there is no indication of any substantial rise for some time to come.