Coconut Oil prices in the Indonesian market witnessed a sharp increase in May 2025, driven by a severe tightening of coconut supply and rising international demand. The surge followed a series of compounding factors that pressured the market and sent prices climbing across the domestic landscape.
Coconut Oil prices in the Indonesian market witnessed a sharp increase in May 2025, driven by a severe tightening of coconut supply and rising international demand. The surge followed a series of compounding factors that pressured the market and sent prices climbing across the domestic landscape.
In May 2025, there was a significant increase in prices for Coconut Oil in Indonesia due to a noticeable availability shortage of raw coconut, caused by low harvest yields along with poor processing activity in the country's main producing areas. The El Niño weather pattern had a negative impact on crop performance, reducing fruit-bearing capacity and driving plantation operations to levels below habitual production. The supply shortage was made more severe by increasing fresh coconut exports, particularly to China, which increased by an unprecedented 146% compared to the previous year in the first quarter. The supply deficit of raw coconut caused input costs to rise, which created costs for the processor that rose considerably.
With rising costs and reduced access to raw coconut, a number of producers reduced their processing operations which only added to the reduction in the supply of Coconut oil. Due to inclement weather and logistical issues, delivery lead times for orders reached the longest times in nine months, adding further restrictions to the market. On top of this, a weak regulatory environment along with poor cooperation between coconut farmers and oil processors had stretched efficiencies along the supply chain. With domestic supply issues and prices rising, the Indonesian government began to evaluate an export duty to whole coconuts to slow the outflow of raw materials and support the local industry, with the expectation of balancing the market in the coming months.
The Indonesian Coconut Oil market remained strong in May 2025, supported by strong global demand, according to ChemAnalyst. International buyers from Asia and Europe boosted their Coconut Oil purchases for use in food processing, cosmetics, and industry applications. Prompted by solid pricing and dependable shipping, export activity in Indonesia increased as suppliers and producers responded. Weakening of US dollar against Indonesian rupiah made Indonesian Coconut Oil more attractive in international market and hence price competitive. Domestic offtake from downstream industries especially food and personal care sectors was also steady and added to the firm demand, hence the upward trend in prices.
According to market sources, prices are expected to go up in June 2025 in Indonesia. Coconut Oil prices will go up as coconut and copra availability is expected to tighten and hence production will be limited. Market is strong and international demand will improve this month. Many suppliers will hold back stock from sale this month in anticipation of better margins and hence will contribute to short term tightness and upward momentum in prices. Many suppliers are expected to continue withholding stock from immediate sale in anticipation of better overall sales margins, leading to slightly tighter availability and upward pricing.
