2025 Market Predictions

The TL: DR

In 2025, the coconut market will face a mix of challenges and opportunities due to lower production volumes, raw material shortages, and geopolitical factors.

While desiccated coconut exports from the Philippines demonstrated resilience in 2024, weaknesses in the supply chain continue, particularly due to a mothballed major production facility and the ongoing impacts of drought.

The increasing urgency among buyers to secure supplies underscores the tight market conditions, which are further complicated by competitive pressures and limited capacity among suppliers. This will mean prices will inevitably rise as supplies tighten.

Although shipping costs are also projected to rise in the short term, they will also be influenced by global economic uncertainties and regulatory changes. With shipping times remaining longer, due to the voyages around Africa continuing through 2025.

Our Predictions

“There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say, we know there are some things we do not know.

But there are also unknown, unknowns”

Donald Rumsfeld, Feb 2002

When predicting the coconut market, there are a lot of “unknown unknowns” right now.

We can only look at what we know, which is what happened over the past couple of months vs last year.

The Volume of Production of Desiccated Coconut from the Philippines

Looking at the export figures from the Philippines, we can see that 2024 had some unusual trends, but overall, exports were up 3.8% from January to November for desiccated coconut.

Source: Export Data of Coconut from the Philippines

We can see that most producers in the Philippines increased their exports in the second half of the year.

Source: Export Data of Coconut from the Philippines excluding Franklin Baker Inc.

However, one producer mothballed its biggest production facility in October, and their exports were down significantly in the second half of the year.

The decline in the export of high-quality coconuts, which began in June 2024, has resulted in a notable shortage impacting many of their long-standing customers across Europe and the Middle East.  This means they are now aggressively looking for and not finding product.

In contrast, it appears that the United States part of the operation currently has some stockpiles of coconut, allowing their supply chain to remain stable for the time being. However, this situation may change if the decline in exportation persists.

Enquires, Capacity and Supply

Recently, we have observed a significant increase in inquiries from various end customers as their existing supplies dwindle. This uptick in interest underscores the urgency for customers to secure their coconut supplies before the situation worsens.

Currently, we are at near full capacity in terms of sales, as our suppliers have informed us of a shortage of raw materials. This situation has created a challenging environment for us as we strive to meet the demands of our customers.

As buyers begin to explore alternative sources for desiccated coconut, we are seeing a gradual depletion of supply from other importers. Many of these importers are also encountering similar shortages, leading to full inventories being quickly exhausted.

Compounding this issue is that existing customers are proactively securing their bookings earlier than usual to avoid potential shortages, resulting in a highly competitive market landscape.

Overall Volumes of Raw Material

Drought conditions impacted the supply and quality of raw coconuts in 2024. However, with the recent rainfall, this issue is expected to be less pronounced in the short term for 2025. Nonetheless, reports indicate that there are still some concerns in the market. 

Interestingly, while we face these supply constraints, other exporters are not seeing this or are not reporting this, evidenced by a noticeable increase in exports during the latter half of 2024.

Again, we are unsure what to make of this as there is no definitive reason other than raw material shortages.

What we expect for 2025

Currently, we do not have any concrete updates regarding supplies for 2025. The status of the mothballed factory’s reopening remains uncertain. It is important to note that returning the factory to full operational capacity will likely require several months rather than weeks, especially considering the challenges of rehiring laid-off staff.

As we have said, a lot of this is conjecture based on export data and news from the Philippines, but we expect this will affect prices and supply into 2025.

We anticipate a period of increased volatility over the next few months. Additionally, our forecasts do not take into account any potential changes regarding proposed tariffs from the incoming U.S. government.

Shipping Costs and Timings

Container shipping costs from the Far East to Europe are experiencing fluctuations in 2024, driven by a mix of market dynamics and external factors. Spot rates for containers surged notably in early 2024, with rates to Northern Europe increasing by 30%, and then again in July.

This rise can be attributed to an early peak season and disruptions such as geopolitical tensions in the Red Sea, which forced the rerouting of vessels, thus increasing transit times and operational costs.

New surcharges, including carbon limitation fees and emission control area charges, have also been added to the base freight rates.

Looking ahead to 2025

Container shipping costs are expected to stabilise but remain influenced by a potential slower growth in demand. Forecasts suggest a 3-4% growth rate in container volumes for 2025, compared to the higher 5-6% growth in 2024.

However, global uncertainties and economic pressures, such as inflation, could continue to impact pricing. Rates for Asia-Europe routes at the beginning of 2025 are expected to remain elevated, with estimates of around $5,324 per FEU for Northern Europe destinations. While demand is projected to moderate, supply chain complexities and evolving regulations may still create volatility in shipping costs.

The forthcoming alterations to the network implemented by the major container shipping companies appear poised to guarantee the sustained operation of services around the Cape of Good Hope until the latter half of this year.

CEO and partner at Vespucci Maritime Lars Jensen told The Loadstar resumption of services through the Suez Canal would involve further network changes, and he questioned whether carriers would be willing to make these before August, “at least”.

So, shipping times will continue to be longer for most of 2025, and this will keep costs higher.