Saturday, February 28, 2009

Drive Away Alzheimer's

Here's from Ed Canela:

Maray na aga sa indo gabus

I am sure no one will ever try this puzzle in our group…. But I like to share it with you anyway. Na-solve ko kasi, he, he, he. So, no pressure, no deadlines, no prize also. It is just the nice thought that we are still he, he, he. Lots of huggggssssss from Vientiane….


Subject: Alzheimer prevention puzzle

A good way to prevent Alzheimer is to exercise the mind with a light enough puzzle that is solvable within 15-30 minutes.

Try this:

A military officer, newly arrived at a military facility, forgot the 5-digit access code for a building. The security guard is not authorized to give the access code, only the clues to it.

Here are the clues:

1. The fifth number plus the third number of the access code equals fourteen.
2. The fourth number is one more than the second number.
3. The first number is one less than twice the second number.
4. The second plus the third number equals ten.
5. The total of all the five numbers is thirty.

Have fun!

Read More...... Read more!

Friday, February 20, 2009

Optical Illusion

Look for NINE PEOPLE in the picture!

Read More...... Read more!

Monday, February 16, 2009

Coconut Oil: Surviving the Market's Mt. Everest by Bert Padrigon



If you’re somewhat baffled by the title of this paper, I do understand.
For indeed, how in the world did coconut oil have anything to do with “Mt. Everest”?

But if you look at this 2008 price chart of Coconut Oil and the major tropical vegetable oils,
..and this snapshot of that legendary mountain, Mt. Everest, I’m quite sure you will easily see the striking resemblance!

World Coconut Oil Trade

 Just to put things in perspective, as most of you are aware, Coconut Oil is traded in the world market along with a spectrum of several vegetable oils and fats.

 Over the years, Coconut Oil has been a minor oil in terms of volume or % share - only 4% of world trade. Thus it is inevitably affected by the price movements of the world oils and fats market in general.

 Nonetheless it has remained a premium oil over most of the others - and definitely the highest priced oil among the so-called tropical vegetable oils, - due to its properties and distinct usage.

Sharp Rise, Steep Fall In 2008

n If one were to re-trace the market footprints during the last 11 months, it would be much like climbing the multiple peaks and cliffs of Mt. Everest - and back!

n This is precisely why the last 11 months can be considered as probably the most turbulent, and therefore challenging, period in vegetable oils history.

Record Peaks

n On the journey upwards, prices culminated in record peaks of $1,625/mt cif Rotterdam for Coconut Oil, $1,620/mt for Palm Kernel Oil (Pko) and $1,425/mt for Crude Palm Oil (Cpo) in March 2008.

n What factors were at play during the period?


n Looking at supply side - it seemed all was well and normal.

n USDA figures showed year-on-year gains in the major vegetable oils production for 08-09.

n So then, why the sharp rallies?

Supportive Factors Jan-July 08

1. The demand side. It was a demand-driven season for food, bio-fuel, and oleo chemicals.

- incremental demand far outweighing incremental supply.

- high demand for soy oil left buyers seeking lower-priced palm oil to fill the gap.

- China was building up supply for the Olympic season.

2. Soybean acreage feared to lose again vs. corn acreage in the new season.

- Old crop carryover stocks for U.S. beans were tight.

3. Weather problems. Too much rains in the Midwest could delay plantings, make yield suffer.

4. Argentine farmers went on strike; there were fears of demand diversion to U.S.

Soy oil.

5. Rallying crude oil prices. At the Nymex, light, sweet crude rallied to $147/bbl on July 11, ‘08.

6. Funds were on buying mode and holding on their investments.

After Mid-July 2008 –
Why the sharp drops?

1. Soybean Acreage gained. After all the 74.8 mil (as per USDA report) acreage is 18% more than last year.

2. Midwest weather improved during the US soy crop’s growing months.

3. The Argentinean farmers’ strike was called off by mid-July.

4. Palm Oil demand slowed down, China was through buying and now well-stocked.

5. to make matters worse, high priced palm oil contracts were being dishonoured or cancelled.

6. Crude oil dropped sharply. From a high of $147/bbl, it went downhill to reach $111/bbl at the Nymex by mid-Aug.

7. as for Cno, spread with Pko widened to over $100/mt.

September Slide

1. Prices made some recovery in Aug 08 but gave way again in late-Sept. ‘08.

2. U.S. financial markets’ collapsed.

3. Crude oil plummeted anew below $100/bbl, on forecast of world economic slowdown.

4. Stronger US dollar.

The October Plunge

1. $700-B “Bail out Plan” didn’t inject full market confidence.

2. Fears of global economic recession.

3. Crude oil plummeting to under- $70/bbl due to weak demand.

4. Dollar continuing to strengthen.

5. Continued slow exports in Palm Oil and high inventories in Malaysia (2.0 mil mt) and Indonesia (2.5 to 3.0 mi mt).

6. Indonesia scrapped Cpo export tax to help boost exports.

By October ‘08, Prices Were Back to Square One!

n Prices tumbled to Oct. 2006 levels, EXACTLY NEAR THE START OF THE PREVIOUS BULL SEASON!

n By late-Oct ‘08, Coconut Oil had revisited $620-630/mt Cif Rotterdam, Pko $530/mt and Cpo $440/mt.

n These are 61% -70% off the record peaks reached in March ‘08.


November Consolidation

n Coconut Oil prices began to show some stability in November – at the $700 - $750 range up to the present.

n Some consumer short-covering emerged after being absent from the market, or just buying hand-to-month, in previous months.

Domestic prices moved along with rise and fall of foreign vegetable oils markets.

n Domestic Copra and Cno prices rose to record-highs of P43/ kilo in the Quezon area and P41.00 in Davao in mid-June ‘08. The highs were a 46% increase from Jan ‘08 levels.

n On/off crushing was a common situation

Domestic Cno were mostly at premiums over export prices!

n Domestic Cno reached a record P69.00/kilo (noVat) on June 10, 2008.

n It stayed at premium over exports for most of the year..

n Widest premium, $90 -$120/mt during April- May 08 period.

Then the reversal..

n From mid-July however domestic Cno prices cascaded sharply towards late Sep 08, and even more sharply by Oct. 08.

n Copra Prices in Davao fell by 32% from the peak of P41.00 to P28.00 by late-Aug, touched P29.00 by end-Sept..

n And finally plunged to P17.00 by end-Oct’08. These are 2-year lows, and 58% below the record-high.

n By this time Domestic Cno was down to P33.00 per kilo, down 52% from the highs. Momentarily, local premiums were lost.

Local Premiums were back by Oct ’08...

n Meanwhile by late-Oct. ‘08, domestic premiums were back, and appeared headed to widen again, with the resurgence of refiners and bio-diesel producers buying.

Palm Olean Imports

n During the bull season, Palm Olein arrivals in the Philippines were at low levels.

n But as palm prices fell sharply, exports to the Philippines showed an increasing trend from June to October ‘08. (These are based only on Malaysian exports to the Philippines as data from Indonesia are unavailable.)

n Yet these didn’t consistently erode Local Cno market’s premium vs. exports.

Export Performance

n The Jan- Nov ‘08 export for Coconut Oil is basically just unchanged from last year (+0.7%).

- This is much lower-than-expected increase of about +15% industry projection vs. the unusually low 2007 exports (which were coming from typhoon-ravaged 2006).

n And then, if one compares ‘08 exports with the past 5-year average, we are down 17%!

- 11-month exports to Rotterdam: Jan-Nov is down this year vs. last year (-7%) and even much lower vs. 5-yr ave (-37%).

- Exports to the U.S. were likewise down 4% vs. last year but up 4% vs. the 5-year average.

Value of Exports Sharply Up!

n Due to high prices, foreign exchange earnings from Coconut Products are sharply up from last year, though.

n For the 3 major Coconut products alone (Cno, DCN and Copra Meal) - As of Jan-Oct 08, value of exports had exceeded US$1.1 billion, 56% more than same period last year. (The other products’ export earnings data have yet to be posted.)

Copra Production Lagged vs. Expectations

The commonly asked question through these past months was:

Why has Phil. Coconut Production Lagged behind Expectations?

Is Rainfall Enough Indicator?

Ø Rainfall levels have been widely believed to have a 14-month lag effect on coconut production.

Ø Looking at rainfall data in previous year (2007), Phil. Copra production should have been better in 2008! Most stations received above-normal rainfall last year.

Why then has production stalled in 2008?

Factors Hampering Coconut Production Increase

1. Premature harvesting of nuts during high prices disturbs the nuts’ growth cycle.

2. Lack of fertilization and low yields. Ave. national yields are only 53% of potential –of 80 nuts per tree/year according to “PCARRD”.

3. Old, senile trees.

4. Reportedly, Cutting of Coconut trees for lumber has not stopped in some areas.

With all these factors, the rainfall factor now has a much diminished correlation with production!!

Meanwhile Local Consumption has become a bigger sector


1. Cno Edible use - 45,000/month

2. Oleo chemicals - 20,000/month

3. Bio-diesel - 5,000/month

Total - 70,000/month

Biodiesel Law – allows for a 2% blend starting 2009. These will double the Cno requirement to 10K/month which would mean about 75,000 mt/month Cno local usage by ‘09.

Source: Industry surveys and reports.

Effects on Exports

Ø Exports therefore could continue to lag behind expectations.

Ø Premiums in the local market will continue to draw away volumes from export.


Based on estimated exports for Nov and Dec 08:

n We are likely to fall short of the projected 1mil. Mt Cno exports for 2008, by around 155 K mt.

n At 845 Kmt Cno exports, 2008 production would be only about 2.34 mil. Mt copra terms, up merely 5% from last year (vs. initial industry forecast of +14%). This is based on UCAP’s local consumption figure of 643Kmt.

n Overall, supply situation in Philippines remains tight and will remain so – especially for export purposes if local premiums continue - for the year.

n Foreign Exchange earnings, though, could be around US$1.4 billion, a record high.


n Bearish factors continue to abound in vegetable oils. Supplies are more than ample; demand lags behind. Economic recession likely to spread or worsen. Crude oil likely to remain under pressure as global usage declines.

n With prolonged copra supply tightness in the Philippines, Cno is the least bearish of all. It is like a “coiled spring”. It is capable to spring up but being pressed by a top-load of bearish vegetable oils fundamentals and external factors. In addition, there’s the Indonesian factor and Pko’s substitution. The top-load hinders or limits any uptrend.

n Cno therefore will likely just flow with the movements of the other oils, - nonetheless extra sensitive to upticks. Anytime the top-load lightens up, the spring uncoils...

Issues and Challenges

n To survive the expected contraction of demand from traditional markets, due to:

- Widened, worsened recession.

- Substitution by Cheaper Substitutes – specifically Palm Kernel Oil.

n Credit crunch: end-users may be inclined to towards hand-to-mouth buying, apart from reduced quantities.

n Stagnant Production and Low Productivity

According to PCARR, we are only achieving 53% of our potential in terms of nut yields, on average.

n Low Capacity Utilization.

Copra is always short of capacities. Crushing Cap. Is over 4.5 mil. mt of copra per year, double that of copra supply. Thus capacities are perennially underutilized, more so this year that production has under-performed.

n Reduced Foreign Exchange remittances may affect local consumption; Lay-offs, shortened work hours or reduced wages among our overseas workers seem inevitable under a weak global economic situation.

n Quality issues: There’s a need to continue the campaign for good copra quality among farmers. This will help ensure we always meet the allowable “Aflatoxin” limits on Copra Meal, and avoid any quality issues on Cno. Aflatoxin develops from molds and dust due to improper drying and handling of copra. Too much smoking retains unwanted elements in the oil.


n More than ever, there is the need to address Production and Productivity; Commodities with unstable or limited supply base are prone to violent price fluctuations.

Excessive premiums over competing products don’t work towards maintaining market share.

n Support PCA Efforts to increase production:

Among its projects, the PCA is working on… a P2.4 billion replanting and fertilization project

1. Salt Fertilization Project which should help copra production increase by 270,000 mt per year.

2. Participatory Coconut Replanting Project which would help yield increase of 100,000mt per year.

3. Plowable Inter-cropping Project to increase copra production by another 7,000 mt per year.

Private sector support

n The CIIF Group has infused significant amount of Funds for these efforts.

n And probably will inject more...

n ..provided of course it is administered effectively and are showing results..

Other Measures

n More than ever, there’s the need to intensify efforts to diversify markets. The share of Asia and Other markets must be expanded to provide a cushion for the expected contraction of demand in the traditional markets.

n Government and private sector should work on improving copra quality at the farm level, if Coconut Oil and Copra Meal have to maintain its long-term share in the world market.

n The government sector should devote serious efforts to strictly implement RA 8048 regulating cutting of coconut trees less than 60 years old. Productive trees must be spared from cutting for lumber.

n On the micro-level , it has been suggested that companies must think through their business model in a low-growth economy. Debts must be reduced to acceptable levels, and serious cost cutting is most likely inevitable to offset any slackening of gross revenues.


n The industry faces an uphill struggle in 2009 and beyond. Shrinking demand, high costs and threats from cheaper substitutes plus an overall negative influences from outside factors won’t be easy to hurdle.

n Prices could remain volatile due to a mixture of fundamental and outside factors coming into play.

n Like these weary travelers’ path, the roads are slippery and full of risks.

“Like the persevering Climber”

n In recent days government authorities have assured us, “we have a resilient economy and a resilient banking system”.

n I dare say that we also have a resilient Coconut Industry.

n It has endured and survived multiple and bigger challenges in its over 100 years of existence.

n And with all sectors cooperating, in the end - like this persistent climber at Mt. Everest - it has good a chance to endure and prevail!


Email us at

Raco Commodities Phils., Inc.

Makati City Philippines

02 December ‘08

Read More...... Read more!

Sor Victorina de la Providencia, Mother Superior of Daet Parochial School

HS Solo Graduation Pictures

DPS Class67 HS Graduates, 40 Years After

This Day in History

Today's Birthday