A Bullish Coconut Oil Market in the Second Half of 2025
The global coconut oil market in the second half of 2025 is navigating a complex landscape shaped by tightening supply, robust demand, and significant price volatility. Total production is projected to rise marginally to 3.56 million metric tons (MMT) in 2025, up from 3.50 MMT in 2024. The Philippines remains the leading producer, with its output expected to increase from 1.57 MMT in 2024 to 1.60 MMT in 2025, while other major producers like Indonesia and India are anticipated to see modest gains. Despite these increases, production will remain constrained due to adverse climatic conditions, including El Niño effects, which are limiting crop yields. These production constraints are likely to contribute to upward pressure on prices, particularly as demand continues to rise across food, cosmetic, and biofuel sectors.
On the import side, global demand for coconut oil is projected to stay steady, albeit with slight fluctuations. The European Union (EU-27) will continue to be the largest importer, expected to stabilize at around 650,000 metric tons, while U.S. imports will decrease slightly from 496,000 metric tons in 2024 to 460,000 metric tons in 2025. However, trade policy complexities add a layer of uncertainty. The reimposition of U.S. import tariffs—ranging from 18% to 46%—by the Trump Administration to protect domestic oilseed producers and promote U.S.-made biofuels is expected to affect key exporters like Indonesia and the Philippines. This policy, which increases costs for importers, especially food processors and biofuel blenders relying on lauric oils, has diverted some Southeast Asian coconut oil supplies toward the EU market, but not enough to fully offset the tightening global supply. These tariff-related shifts have contributed to elevated prices in both the U.S. and EU markets.
The global supply of coconut oil is expected to tighten slightly from 6.31 MMT in 2024 to 6.28 MMT in 2025. This decrease is driven by reduced imports from key markets like the U.S. and Malaysia, although growing imports from China will partially offset these declines. Exports are forecast to drop from 2.60 MMT in 2024 to 2.38 MMT in 2025 due to the tightening supply and shifts in trade dynamics. Domestic consumption is projected to rise slightly from 3.21 MMT in 2024 to 3.30 MMT in 2025, reflecting steady demand across multiple industries. However, the impact of U.S. tariffs and the strain on supply chains will likely further exacerbate price volatility in the coming years.
Price trends in early 2025 reflect the growing uncertainty in the coconut oil market, with a significant upswing observed. Coconut oil prices surged from around USD 1,976 per metric ton in January to USD 2,587 in April, a 31% increase. This sharp price recovery contrasts with the relatively subdued prices of 2023, when coconut oil ranged between USD 1,000 and USD 1,200 per metric ton. Palm kernel oil prices also rose by 6.5% over the same period, highlighting the broader market pressures on tropical oils. The recent bullish pricing is a result of supply constraints from key producers, compounded by the effects of El Niño, coupled with rising demand from food industries, oleochemical manufacturers, and biofuel producers competing for limited tropical oil supplies. These factors suggest that the coconut oil market will continue to face significant challenges related to supply shortages, rising prices, and evolving trade policies in the near future.
The broader market context further supports growth projections. The global coconut oil market was valued at approximately USD 5.49 billion in 2025 and is expected to reach USD 7.61 billion by 2029, with a compound annual growth rate of 8.5%. This expansion is driven by increasing consumer demand for plant-based and vegan products, rising interest in natural cosmetics and personal care formulations, and the growing use of coconut oil in functional foods and beverages. Moreover, sustainability initiatives in developed markets, particularly the EU and U.S., are fuelling demand for bio-based and renewable ingredients, where lauric oils play a critical role.
Looking ahead, the coconut oil market is expected to remain volatile but fundamentally strong through the second half of 2025. Prices are projected to hold within the USD 2,500 to USD 2,700 range per metric ton for coconut oil and USD 2,000 to USD 2,150 for palm kernel oil, supported by constrained supply, firm demand, and ongoing trade frictions. However, any easing of weather disruptions or shifts in consumer preference toward less costly soft oils could moderate the current bullish outlook. Stakeholders must closely monitor climatic developments, policy changes, and evolving demand trends, especially in the biofuel and oleochemical sectors, to effectively manage risk and capitalize on emerging opportunities.