As 2025 commences, the Philippines' coconut oil (CNO) export market is experiencing a significant upward trend in its prices. This surge is attributed to a confluence of robust global demand, climatic adversities affecting coconut oil production, and evolving regulatory landscapes. The global appetite for various edibles has intensified, particularly in Europe and North America, where consumers increasingly favor natural and sustainable products. This shift has been positioned as a preferred alternative in culinary, cosmetic, and industrial applications. The impact of this growing demand is evident in coconut oil prices, which reached $1,860 per metric ton in early 2025—an increase from December 2024 levels in key-producing nations, particularly the Philippines.

From a production standpoint, the El Niño weather phenomenon has posed significant challenges to the Philippines' coconut oil industry. Characterized by prolonged dry spells, El Niño adversely affects coconut oil supply by disrupting coconut flower development, leading to reduced yields. The United States Department of Agriculture's Foreign Agricultural Service (USDA-FAS) in Manila projects a nearly 15% decline in copra production for the 2024-2025 market year, decreasing from approximately 2.94 million metric tons to nearly 2.5 million metric tons. These production challenges are further compounded by the aging of coconut trees and the delayed implementation of replanting programs. While government initiatives aim to rejuvenate the industry, their effects are not immediate, leading to sustained supply constraints and an upward trend in coconut oil production costs and availability.

At the same time, the European Union's Deforestation Regulation (EUDR), initially slated for implementation on December 30, 2024, has introduced additional complexities to the coconut oil export landscape. The regulation imposes stringent requirements on agricultural imports, including coconut oil, to ensure they are not linked to deforestation activities. However, a 12-month postponement of the EUDR's enforcement to December 30, 2025, may offer temporary relief, potentially stabilizing coconut oil prices as markets adjust to the revised timeline.

Industry analysts project that coconut oil prices will remain elevated in the first half of 2025, likely staying on the upper side. This forecast reflects the interplay of constrained supply due to climatic factors and robust global demand across various sectors. The narrowing price gap between coconut oil and its substitute, palm kernel oil, underscores the competitive dynamics within the edible oil market.

In summary, the convergence of heightened global demand, adverse weather impacts on coconut oil production, and regulatory developments has propelled Philippine coconut oil export prices upward as 2025 begins. Stakeholders within the downstream industry are closely monitoring these factors to navigate the challenges and opportunities presented in this evolving market landscape.