Price Trends and Market Dynamics

The coconut oil market has shown strong performance, continuing its upward trend in early November. Coconut oil prices in the Rotterdam market climbed to $1,837.50/MT CIF, an increase of $85.00 from the previous week. This rise is part of a broader pattern of firming prices in the vegetable oils sector, driven by robust demand and tight supply. Despite the price surge, trading activity remained limited as buyers exercised caution, especially for first-quarter 2025 positions.

Palm kernel oil also saw substantial gains, jumping $94.33 to $1,803.33/MT CIF. The sharp increase in palm kernel oil prices has further reduced the typical premium held by coconut oil. This shift highlights intensified competition in the lauric oils market, impacting the price dynamics between coconut oil and its closest substitutes. For the first time in weeks, the price premium of coconut oil over palm kernel oil has narrowed, reflecting tighter margins for coconut oil exporters.

Philippine Export Growth and Market Expansion

The Philippines is targeting increased exports of high-quality coconut oil to Australia, with Ares Merchants Philippines Inc. (AMPI) planning to ship an additional 30,000 metric tons annually. This initiative aims to meet the growing demand in Australia for food and beverages, which increasingly turn to coconut oil for its health benefits and versatility as a dairy alternative. The expansion is expected to generate an additional $70 million in revenue, benefiting Filipino coconut farmers by opening up premium market opportunities.

The latest export data for July also show a sharp rise in Philippine coconut product exports, reaching 302,913 metric tons, a 38.8% year-on-year increase. Coconut oil exports hit an all-time monthly high, driven by strong demand from Europe and the United States. Desiccated coconut exports performed well, with shipments up by 14.6% compared to the previous year. The robust export figures reflect the resilience of the Philippine coconut industry amid global market challenges.

Global Market and Regulatory Updates

Sri Lanka’s coconut industry is facing a downturn due to inconsistent fertiliser policies and rising costs, leading to a decline in production from 3.0 billion nuts to 2.85 billion nuts annually. The situation is exacerbated by pest infestations and a lack of adequate farmer support, highlighting the challenges that coconut producers face in the region. Meanwhile, the European Union has suspended import tariffs on specific agricultural products, including coconut oil, starting in January 2025. This policy aims to alleviate supply shortages and support the European food industry, potentially providing new export opportunities for coconut-producing countries.

Outlook

The coconut oil market is expected to remain firm in the coming weeks, supported by strong demand and rising prices in the vegetable oils market. However, exporters should prepare for continued volatility as global economic conditions evolve and regulatory changes impact trade flows. With its expanding market access and strong export growth, the Philippine coconut industry is well positioned to capitalise on these opportunities while navigating the challenges ahead.