Coconut Market Update 23rd June 2025

Global Coconut Market Update: Price Pressures and Supply Dynamics

The coconut oil market experienced notable volatility during the week ending June 14, 2025, with European coconut oil prices showing a mixed trading pattern. After opening with little change from the previous week at $2,608.50-2,790/MT CIF for positions spanning May/June through December/January 2026, prices initially declined alongside other vegetable oils before recovering to close in positive territory at $2,580-2,820/MT CIF.

A transaction was recorded at $2,585/MT CIF for July/August delivery, marking the first reported trade since late April when oil changed hands at $2,480/MT. This price action reflects the ongoing uncertainty in global vegetable oil markets as traders navigate supply constraints and demand fluctuations.

The premium of coconut oil over palm kernel oil continued its upward trajectory, reaching levels above $1,000 across all positions and pushing the weekly average to $1,079.69/MT, up from $966.13 the previous week. This widening spread indicates the relative scarcity of coconut oil compared to alternative tropical oils, with June/July positions showing a premium of $1,082.55/MT.

The sustained high premium underscores the supply challenges facing the coconut industry, particularly following the impact of the El Niño weather pattern on 2024 production, which continues to affect 2025 supplies.

Desiccated coconut prices demonstrated remarkable stability in the export market, maintaining a consistent range of 145-190¢/lb FOB across all major markets, including the USA, Europe, and other destinations for three consecutive weeks. However, domestic Philippine prices for desiccated coconut showed slight upward movement, rising to P5,027- 5,306.50 per 100-pound bag from P5,016- 5,295 the previous week. This price divergence between international and domestic markets suggests strong local demand or processing constraints that are keeping domestic prices elevated while export prices remain stable.

Meanwhile, supply concerns persist across major producing regions, with Sri Lanka forecasting a further decline of 250 million nuts in the first half of 2025 compared to the previous year, and Karnataka, India, experiencing record-high ball copra prices due to weather-related production impacts. These supply-side challenges, combined with steady global demand for coconut products, suggest that price volatility will likely continue as the market seeks equilibrium between constrained supply and sustained consumption patterns.

Shipping News

The Strait of Hormuz stands as one of the world’s most critical maritime chokepoints, with Iran wielding significant influence over global shipping and energy markets through its strategic position along this narrow waterway. More than a quarter of global maritime oil trade flowed through the Strait of Hormuz in 2024 and early 2025, equalling about one-fifth of oil and petroleum consumption worldwide. This 21-mile-wide passage between Iran and the Arabian Peninsula serves as the primary gateway for oil exports from the Persian Gulf, making it indispensable to global energy security. Iran has consistently used the threat of closing the strait as a geopolitical lever, with the Iranian Parliament voting to close the Strait on June 22, 2025, pending a decision from the Supreme National Security Council.

Recent escalations in Middle Eastern conflicts have heightened concerns about shipping disruptions through the strait. Some shipowners are opting to steer clear of the strategically important Strait of Hormuz, reflecting growing industry unease as the Israel-Iran conflict rages on. While experts generally consider an actual closure unlikely due to the severe economic consequences it would impose on Iran, which relies heavily on the strait for its own oil exports, the mere threat of disruption continues to rattle global markets. The situation demonstrates how Iran’s geographic position enables it to exert substantial leverage over international commerce, with the possibility of interference capable of driving up energy prices and forcing shipping companies to seek alternative, often longer and more expensive routes around Africa.

If oil prices spike due to concerns about Middle Eastern supply, it may make coconut oil slightly more attractive as a biofuel alternative in some tropical countries, potentially creating minor upward pressure on prices. But overall, any price impacts on coconut oil from Strait of Hormuz tensions would be minimal and indirect compared to the dramatic effects on petroleum markets.