Coconut Oil in 2026: A Market Caught Between Short-Term Relief and Long-Term Constraint

After two years of pronounced tightness, the global coconut oil market enters 2026 with tentative signs of near-term relief. Production is expected to recover modestly, trade volumes are improving from depressed 2025 levels, and prices are likely to soften in the first half of the year. Yet this apparent easing masks deeper structural constraints that continue to define the market. Coconut oil, once a niche edible oil, has become a strategic input for food, oleochemicals, cosmetics, and specialty industrial applications—an evolution that has permanently altered its supply-demand balance.

Unlike annual oilseed crops such as soybean or sunflower, coconut oil production depends on perennial trees with long gestation periods and limited short-term responsiveness to price signals. As a result, even modest changes in output or demand tend to generate outsized price movements. This structural rigidity will remain a defining feature of the market throughout 2026.

Production: Incremental Gains, Enduring Limits

Global coconut oil production in 2026 is projected at approximately 3.5 million metric tons, up from an estimated 3.16 million metric tons in 2025, and broadly comparable to the 3.50 million metric tons recorded in 2024. The recovery reflects improved weather conditions and slightly better yields in key producing countries, particularly in Southeast Asia, following weather-related disruptions in recent years.

The Philippines continues to anchor global supply. After production fell sharply from around 1.57 million metric tons in 2024 to 1.36 million metric tons in 2025, output is forecast to rebound to nearly 1.60 million metric tons in 2026, restoring its position as the source of roughly 45 percent of global production. Indonesia, the second-largest producer, is expected to see output rise from about 768,000 metric tons in 2025 to approximately 827,000 metric tons in 2026.

Production in other countries—including India, Sri Lanka, Papua New Guinea, and Pacific island economies—is projected to increase from roughly 1.02 million metric tons in 2025 to about 1.09 million metric tons in 2026. Much of this output, however, is absorbed domestically, limiting its contribution to exportable supply.

Despite this cyclical recovery, the underlying supply picture remains constrained. Aging plantations, slow replanting, limited mechanization, and increasing competition for coconuts from higher-value products such as virgin coconut oil, desiccated coconut, and coconut milk continue to restrict the availability of copra for crushing. As a result, the production rebound in 2026 represents stabilization rather than a structural loosening of the market.

Trade: Recovering Volumes, Persistent Tightness

Global coconut oil exports are forecast to recover to around 2.44 million metric tons in 2026, up from approximately 2.3 million metric tons in 2025, but still well below the 2.89 million metric tons recorded in 2024. Trade flows remain shaped primarily by supply availability rather than demand potential.

 

The Philippines is expected to increase exports from about 1.19 million metric tons in 2025 to roughly 1.25 million metric tons in 2026, following a steep contraction from 1.67 million metric tons in 2024. Indonesia’s exports are projected to rise more moderately, from 562,000 metric tons to around 624,000 metric tons, reflecting both improved output and policy priorities that favor domestic processing and value addition.

Exports from Malaysia are forecast to edge up to approximately 128,000 metric tons, while shipments from Papua New Guinea and Sri Lanka together are expected to total around 35,000 metric tons. Although modest in scale, these volumes remain important for regional and niche markets.

On the import side, global purchases are projected at around 2.10 million metric tons in 2026, up from 1.92 million metric tons in 2025, though still below 2.56 million metric tons in 2024. The European Union remains the largest importing region, with imports forecast to rise from 594,000 metric tons to about 629,000 metric tons, underpinned by steady industrial demand. U.S. imports are expected to recover from 380,000 metric tons in 2025 to around 410,000 metric tons in 2026, while China’s imports are projected to increase modestly to approximately 164,000 metric tons.

Price Outlook: Near-Term Easing, Elevated by Historical Standards

Against this backdrop, coconut oil prices in 2026 are expected to follow a two-phase trajectory. In the first half of the year, prices are likely to face downward pressure as production recovers, export volumes improve, and importers—still adjusting to the high-price environment of recent years—adopt a cautious purchasing stance. The rebound in global output from 3.16 million metric tons in 2025 to around 3.5 million metric tons in 2026, alongside the recovery in exports, is expected to ease immediate supply concerns.

However, this price softness is unlikely to be sustained. On an annual average basis, international coconut oil prices are projected to remain within the range of USD 2,000 to USD 2,300 per metric ton, well above pre-pandemic norms and at a persistent premium to major vegetable oils. The recovery in production merely restores supply to earlier levels rather than creating surplus capacity, while global export availability remains constrained at just over 2.1 million metric tons.

Structural factors continue to underpin prices. Coconut oil’s limited substitutability—particularly in oleochemicals and personal care applications—renders a significant portion of demand relatively price inelastic. While elevated prices may curb consumption in cost-sensitive food uses, industrial demand is expected to remain resilient, providing a floor to the market. Downside risks to prices therefore appear limited unless exceptionally favorable weather coincides with a broader slowdown in global industrial activity.

A Market Redefined

What ultimately distinguishes the coconut oil market in 2026 is not the prospect of short-term price easing, but the persistence of long-term scarcity. Demand has shifted decisively toward industrial and specialty applications, while supply remains rooted in smallholder-based production systems vulnerable to climate risk and structural inefficiencies.

In this context, the modest recovery reflected in the 2026 data should be interpreted less as a turning point than as a pause. Coconut oil has become a strategic, high-value component of the global vegetable oils complex—one where prices may fluctuate, but where abundance remains elusive.