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Market Review of Coconut Oil
January 2024
In 2023, the global market for lauric oils experienced notable price fluctuations, offering insights into the industry's dynamics. Throughout the period spanning January to December 2023, coconut oil prices remained relatively stable, commencing at US$1,071/MT in January and showing marginal fluctuations, declining to US$993/MT in June before strengthening to US$1,118/MT by December 2023. This stability was primarily attributed to the delicate equilibrium between supply and demand. However, with expectations of an increase in demand and the potential for reduced supply, the outlook for coconut oil prices indicates an upward trajectory in the ensuing months.
Conversely, the price of palm kernel oil exhibited a gradual decrease during the same timeframe, starting at US$1,060/MT in January 2023 and steadily declining to US$966/MT by December 2023, averaging at US$990/MT. Various factors, including supply dynamics and market forces, contributed to this downward trend. As the lauric oils market adjusts to evolving conditions, the price of palm kernel oil is anticipated to mirror these adaptations, with prospects of improved prices in the forthcoming months.
The period spanning January to November 2023 witnessed significant shifts in the supply dynamics of lauric oils, with the Philippines and Indonesia showcasing distinct performances.
The Philippines, renowned for its role in coconut oil production and export, experienced a notable decline in export performance over eight months of 2023. Data from the Philippine Statistics Authority revealed that coconut oil exports from the country totaled 752,504 tons during this period, marking a substantial 12.5% reduction compared to the previous year. This decline can be attributed to a combination of diminished demand and increased supply. Key destinations for these exports included the Netherlands, the USA, Italy, Malaysia, Spain, and China.
In contrast, Indonesia observed a surge in coconut oil exports over eleven months of 2023. The country shipped 663,644 MT of coconut oil to the global market, signifying a 7.3% increase compared to the previous year's volume. However, despite the uptick in export volume, export earnings decreased from US$1.02 billion to US$664.2 million, reflecting a lower unit price of the oil. Major markets for Indonesian coconut oil exports included Malaysia, the Netherlands, China, the United States, and Sri Lanka.
Table 1. Exports of Lauric Oils from Indonesia
| Jan-Nov 2022 | Jan-Nov 2023 | Change (%) | ||
| CNO | Volume (MT) | 618,731 | 663,644 | 7.3 |
| Value (USD'000) | 1,018,915 | 664,216 | -34.8 | |
| PKO | Volume (MT) | 1,227,055 | 1,238,677 | 0.9 |
| Value (USD'000) | 1,900,109 | 1,177,410 | -38.0 | |
| Lauric Oils | Volume (MT) | 1,845,786 | 1,902,320 | 3.1 |
| Value (USD'000) | 2,919,024 | 1,841,626 | -36.9 | |
Source: BPS-Statistics Indonesia
The European and US markets, significant players in the global lauric oils trade, witnessed noteworthy changes in demand during eleven months of 2023.
The European market experienced a slight decline in lauric oil imports during this period, with imports decreasing by 1.3%. Coconut oil was the primary contributor to this decline. The economic slowdown in Europe played a pivotal role in the reduced demand for coconut oil and other lauric oils. However, there are expectations of a rebound as the regional economy displays signs of improvement.
Table 2. European Union (EU28) Imports of Lauric Oils
| Jan-Nov 2022 | Jan-Nov 2023 | Change (%) | ||
| CNO | Volume (MT) | 932,344 | 899,542 | -3.5 |
| Value (USD'000) | 1,793,570 | 1,244,354 | -30.6 | |
| PKO | Volume (MT) | 701,014 | 712,781 | 1.7 |
| Value (USD'000) | 1,369,276 | 983,086 | -28.2 | |
| Lauric Oils | Volume (MT) | 1,633,359 | 1,612,322 | -1.3 |
| Value (USD'000) | 3,162,846 | 2,227,440 | -29.6 | |
Source: ITC
Similarly, the United States market witnessed a substantial decrease in lauric oil imports during January-November 2023. Imports of these oils plummeted by 13.5%, mainly attributed to a surge in coconut oil imports. US imports of coconut oil decreased from 498.3 thousand tons in January to November 2022 to 389 thousand tons during the same period in 2023. The economic slowdown in the US significantly influenced this decline in imports.
Table 3. US Imports of Lauric Oils
| Jan-Nov 2022 | Jan-Nov 2023 | Change (%) | ||
| CNO | Volume (MT) | 498,299 | 389,031 | -21.9 |
| Value (USD'000) | 1,022,598 | 525,588 | -48.6 | |
| PKO | Volume (MT) | 314,312 | 313,625 | -0.2 |
| Value (USD'000) | 697,912 | 417,644 | -40.2 | |
| Lauric Oils | Volume (MT) | 812,611 | 702,656 | -13.5 |
| Value (USD'000) | 1,720,510 | 943,232 | -45.2 | |
Source: The U.S. Census Bureau, Economic Indicators Division
It is imperative to note that the decline in demand for lauric oils in both the European and US markets is expected to be transient. As the economies of these regions gradually recover, the demand for these oils is projected to rebound, potentially stimulating growth in the lauric oil trade.
The year 2023 witnessed various trends in the global trade of lauric oils, characterized by significant price fluctuations, contrasting supply dynamics in the Philippines and Indonesia, and shifts in demand in the European and US markets. While the lauric oils market adapted to the economic slowdown in major importing regions, there is optimism for a recovery in demand as these economies improve. As supply and demand dynamics realign, it is anticipated that prices of lauric oils will experience positive shifts in the near future, reflecting the evolving landscape of the global lauric oils trade.