AMSTERDAM, Dec 6: European consumers are wary of paying premiums for forward coconut oil due to plentiful supplies and are only likely to increase buying once an expected downturn in output emerges, traders said on Thursday.

European prices of coconut oil and the other lauric oil, palm kernel oil, have been trapped in a largely sideways pattern recently, falling behind gains in other vegetable oils.

Nearby coconut oil in Europe was offered at the close on Wednesday at $330 per tonne cif Rotterdam, up about 10 per cent since late October. Crude palm oil gained 25 per cent in the same period.

Consumers have good stocks and are not eager to plunge into the market since material is not difficult to come by.

Consumers are very well covered for the nearby so they can postpone buying. They are still not prepared to pay the premium for the forwards, a Dutch trader said.

At the close on Wednesday, coconut oil for March/April commmanded a $35 per tonne premium over December/January.

Another trader said sporadic buying has been reported by some big consumers on nearby positions this week.

Rotterdam stocks of coconut oil — used in the oleochemical industry for the manufacture of soaps, shampoo and detergents — have more than doubled to 119,285 tons from 54,916 tons in late July.

Stocks of palm kernel oil, a direct substitute for coconut oil in oleochemicals, have also surged to 58,260 tons from 26,139 in March.

Next year the situation is expected to change, with lower coconut oil output from major producer the Philippines, but it was unclear when this would occur and how long it would take to translate into higher prices.

Coconut oil exports from the Philippines, the world’s largest shipper of the commodity, are expected to fall by around 15 per cent next year, local traders have estimated.

Harvests have been plentiful over the past two years and usually output dwindles in the third year of the cycle.

The Philippines accounts for 60 per cent of world trade in coconut oil and Indonesia is the other main exporter.

One European trader said he had heard coconuts were already smaller in size in the Philippines and he expected prices to rally $100-$200 in the first quarter next year.

Once we have some serious information from the origin, people will need to step in to buy something, he said.

Preliminary data for Philippine coconut oil exports for October and November was 265,000 tons, more than expected and up sharply from 184,000 during the same period in 2000, industry publication Oil World said this week.

This would mean continued large arrivals in Rotterdam and further increases in stocks.

Another trader agreed that prices would rise next year, but on a more gradual basis, as the market works through the stock overhang.

There were also feelings that the global economic downturn was hurting demand in the oleochemical sector, he added.—Reuters