Coconut oil markets are experiencing significant volatility as origin prices recover from recent lows, with EXW Manila prices increasing by $230/mt in a single week. This dramatic price movement signals fundamental shifts in the coconut oil supply chain that procurement managers need to understand.

Price recovery from dramatic sell-off

EXW Manila crude coconut oil prices jumped to $2230/mt from $2000/mt, marking a substantial weekly increase. This recovery follows an extreme sell-off that saw prices crash from $2800/mt to $1700/mt just weeks ago.

The price volatility stems from sellers initially releasing piled inventories, which created downward pressure. However, this sell-off has now reversed as sellers raised their offered prices, though current levels remain below the $2800/mt peak seen two weeks ago.

Supply constraints drive market tightness

The underlying driver of price volatility is persistent supply constraints. Copra supply continues running below anticipated levels, with industry sources reporting that actual copra production might only improve in Q4.

This supply shortage is reflected in dramatically reduced export volumes. Philippine coconut oil exports show only 14,500 mt traded from August 1-21, compared to 108,695 mt for the full month in the same period last year. This represents a massive decline in available supply reaching international markets.

Hand-to-mouth buying mode

The market has shifted into a hand-to-mouth buying pattern, indicating buyers are avoiding building inventory positions due to price uncertainty. This cautious approach reflects the difficulty in predicting short-term price movements amid volatile supply conditions.

Market participants suggest prices might increase to $2400-$2500/mt in the near term, though demand remains weak, which could limit further upside potential.

Palm kernel oil benefits from coconut oil dynamics

The tight coconut oil market is supporting palm kernel oil prices, with DAP Malaysia crude palm kernel oil increasing to $1813/mt from $1796/mt. This price strength reflects coconut oil’s role as a substitute for palm kernel oil in various applications.

The stabilized CIF Rotterdam coconut oil price combined with recovering EXW Manila prices is providing a comfortable price environment for palm kernel oil producers.

Outlook and procurement implications

Looking ahead to Q4, the market expects increased coconut oil supply, which should create downward price pressure. However, weather risks remain possible until November, adding uncertainty to supply forecasts.

For procurement managers, this market environment requires careful timing of purchases. While current prices have recovered from extreme lows, the anticipated Q4 supply increase suggests waiting for better pricing opportunities may be prudent for non-urgent requirements.

The coconut oil market demonstrates how supply chain disruptions can create significant price volatility even in established commodity markets. Understanding these dynamics is essential for effective procurement planning in coconut-based ingredients.


This article is part of a full market analysis. Read full market analysis here: https://app.vespertool.com/market-analysis/2224