Coconut oil markets experienced a dramatic shake-up this week, with crude coconut oil prices at origin plummeting from $2,600/mt to $1,715/mt – a steep 29% decline that has left market participants scrambling to understand the underlying supply dynamics.

The sharp price drop appears to be driven by increased copra supply, with copra prices falling from PHP 97/kg to PHP 77/kg according to market sources. This represents a significant shift in a market that had maintained elevated price levels throughout much of 2025.

Price disconnect creates market tension

While origin prices collapsed, CIF Rotterdam coconut oil prices have shown more resistance, declining only $65/mt to $2,900/mt. This disconnect has created a substantial arbitrage gap that market participants expect will eventually narrow as European buyers adjust to the new price reality.

“Nothing heard done,” said one market source, highlighting the current standoff between buyers and sellers. The bid-offer spread has widened to $297/mt, with buyers offering $1,537/mt while sellers maintain asks at $1,835/mt.

Supply control raises questions

Market participants point to the concentrated nature of copra control at origin as a key factor in the price volatility. With pricing power held by a small group of players, the sudden supply increase has caught many off-guard.

Export prices are expected to settle around $2,400/mt FOB for crude coconut oil, but the timeline for price stabilization remains unclear. Several sources confirm that copra supply availability is driving the local price pressure, though the sustainability of current supply levels is still being assessed.

Impact on related markets

The coconut oil price collapse has brought it closer to palm kernel oil pricing, with crude coconut oil now trading near the $1,761/mt level of crude palm kernel oil (DAP Malaysia). This convergence could influence substitution decisions across various food applications.

Palm kernel oil, which typically trades at a discount to coconut oil, may face additional pressure as the traditional price relationship between the two lauric oils adjusts to new market realities.

Market outlook remains uncertain

Looking ahead, the sustainability of current supply levels will determine whether prices stabilize at these lower levels or face further pressure. Before 2025, crude coconut oil prices typically traded below $1,500/mt, suggesting there may be additional room for price adjustment.

The key variable remains how quickly CIF Rotterdam prices align with origin levels. Until this disconnect resolves, market participants will be watching closely for signs of price direction, particularly as buyers begin to re-enter the market at these more attractive levels.

For procurement teams managing coconut oil requirements, the current market presents both opportunity and uncertainty. While lower prices offer potential cost savings, the volatile supply dynamics and pricing disconnects suggest careful timing and supplier relationship management will be critical in the coming weeks.

This article is part of our oils and fats market analysis available here: https://app.vespertool.com/market-analysis/2181