In the first quarter of 2024, the global market for lauric oils experienced notable price increases, reflecting a tight supply of these oils. Throughout the period spanning January to April 2024, coconut oil prices showed an upward trend, commencing at US$1,126/MT in January and strengthening to US$1,420/MT in April. This trend was mainly attributed to an increase in demand and the potential for reduced supply. The outlook for coconut oil prices indicates an upward trajectory in the ensuing months.

Similarly, the price of palm kernel oil exhibited a gradual increase during the same timeframe, starting at US$978/MT in January 2024 and steadily increasing to US$1,290/MT by April 2024, averaging at US$1,120/MT. Various factors, including supply dynamics and market forces, contributed to this upward 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 December 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 in 2023. Data from the United Coconut Association of the Philippines revealed that coconut oil exports from the country totaled 1.09 million tons during this period, marking a substantial 10.6% 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 twelve months of 2023. The country shipped 723,000 MT of coconut oil to the global market, signifying a 5.4% increase compared to the previous year's volume. However, despite the uptick in export volume, export earnings decreased from US$1.09 billion to US$725.2 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. However, recent data from BPS-Statistics Indonesia show that the export of coconut oil declined in the first quarter of 2024, amounting to 229,764 tons, which was 12% lower compared to the same period in 2023.

Table 1. Exports of Lauric Oils from Indonesia

Source: BPS-Statistics Indonesia

The European and US markets, significant players in the global lauric oils trade, witnessed noteworthy changes in demand during 2023. The European market experienced a decline in lauric oil imports during this period, with imports decreasing by 2.7%. Coconut oil was the primary contributor to this decline with a 6% decrease. The economic slowdown in Europe played a pivotal role in the reduced demand for coconut oil and other lauric oils.

Table 2. European Union (EU28) Imports of Lauric Oils

Source: ITC

Similarly, the United States market witnessed a substantial decrease in lauric oil imports during January-December 2023. Imports of these oils plummeted by 33.3%, mainly attributed to a drop in coconut oil imports. US imports of coconut oil decreased from 535 thousand tons in January to December 2022 to 410.3 thousand tons during the same period in 2023. The economic slowdown in the US significantly influenced this decline in imports. However, the latest data from the US Census Bureau shows that US imports of coconut oil increased by 11%, but imports of palm kernel oil continued to weaken, recording a 3% decline during the first quarter of 2024.

Table 3. European Union (EU28) Imports of Lauric Oils

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.