
The global coconut oil market is facing a period of unprecedented turbulence, characterized by skyrocketing prices, supply shortages, and persistently high global demand. In March 2025, significant increases in coconut oil prices, especially from Indonesia, signal a crisis that, according to industry experts, will be sustained by a complex interplay of climatic, geopolitical, and market factors.
At the epicenter of this crisis are the impacts of adverse weather conditions in the main producing regions. The La Niña phenomenon, with its prolonged effects of excessive rainfall, flooding, and typhoons, has drastically affected coconut production volumes, especially in the Philippines and Indonesia, which together account for 55% of global production. This climate variability, coupled with increased pest pressure, is particularly devastating in regions dominated by small producers, hindering production recovery and exacerbating supply shortages.
Impacts on exports and internal obstacles in Brazil
With production stagnant, Indonesia, one of the largest producers, is under increasing pressure. The situation has become so critical that the country has even considered a temporary ban. coconut exports to support their domestic sector—a drastic measure, but one already used in 2022 with palm oil, when exports were suspended for a month. This prioritization of domestic needs by supplier countries further limits availability in the global market.
In Brazil, the local situation adds another layer of complexity to supply. According to suppliers, especially in the Northeast region, demand for coconut fruit in the Southeast is high and paying very well. This leads producers to prefer selling the coconut in its natural state, creating difficulties and a shortage of the fruit for processing coconut oil in the domestic market. Coconut oil extraction depends on the dried pulp, known as copra; when the fruit is diverted to other markets, the raw material simply becomes unavailable. Local processors face the challenging reality that the problem is not only the high cost of the raw material, but also the lack of the fruit itself, with no historical precedents indicating an immediate improvement. Ceará, the main producer of dried coconut in Brazil, has significant influence on the pricing of domestic coconut oil.
Global demand grows despite the crisis
In parallel with supply constraints, global demand for coconut oil continues to grow. Consumers, especially in Europe and North America, are increasingly seeking natural and environmentally friendly products, driving the use of coconut oil in a variety of applications. It is a versatile ingredient, widely used in the food and cosmetics sectors, and, in the Brazilian market, also widely used in hygiene and cleaning products.
An additional factor intensifying this demand is the war between Ukraine and Russia. As these countries are the largest producers of sunflower oil, procurement difficulties have forced global buyers to seek substitutes—and coconut oil has emerged as a vital alternative, directly contributing to rising prices. Furthermore, the growing incorporation of coconut oil into renewable energy applications, such as sustainable aviation fuel (SAF), according to the International Coconut Community, adds a new layer of complexity to demand, creating competition between traditional and emerging uses.
Price pressure and market impacts
The consolidation of coconut oil prices in early 2025 is a direct reflection of this supply and demand dynamic. The price of coconut oil has already risen more than 24% since the beginning of spring. According to the International Coconut Community, the remaining 2024 stock, estimated at 600,000 tons, is expected to fall to 550,000 tons by mid-2025, indicating even lower availability and, consequently, sustaining higher price levels.
This situation intensifies competition with palm kernel oil, its main substitute. Although palm kernel oil has slightly more favorable production prospects, the price gap between the two oils is expected to narrow further, reflecting the growing competitive pressure in the edible oil market. The competitiveness of palm kernel oil will therefore play a crucial role in shaping future trade patterns and prices for coconut oil.
Side effects of the crisis and internal challenges
A direct reflection of scarcity and high prices is the emergence of adulterated products on the market. In Kerala, India, for example, the market for coconut oil and its derivatives is facing a significant setback, with the proliferation of counterfeit oil, taking advantage of the rising value of the genuine product.
The global economic environment also exerts influence, affecting disposable income, consumption patterns, and trade flows. While the continued emphasis on sustainability in developed markets should sustain demand for certified and responsibly sourced coconut oil (which often commands a premium price), economic pressures in price-sensitive regions could undermine consumption growth, leading consumers to opt for cheaper alternatives, such as palm oil or other vegetable oils.
In Brazil, the lack of government support for coconut production represents a significant bottleneck. The sector believes that incentives could stimulate planting and ensure greater availability of raw materials.
In short, the coconut oil market is at a crossroads. Production recovery depends on stabilizing weather conditions and pest control, while demand continues to rise, driven by consumer trends and emerging energy applications. The complex interplay between limited supply and growing demand will continue to dictate the direction and prices of this valuable oil in the coming months and years.
