Coconut Market Report – September 2020


The Philippines is the largest producer of Desiccated Coconut as well as coconut related products in the world. They been severely hit by the effects of Covid 19 which is hampering supply. Metro Manila and the surrounding provinces in the Northern Philippines remain under General Community Quarantine (GCQ). This is after approximately three months of strict lockdown. The southern part of the Philippines around Davao is under a lighter lockdown version known as Modified GCQ.  Under these lockdowns our coconut suppliers continue to operate, albeit with a much lower output than normal. Spatial distancing in the factories, fluctuations in workforce availability, along with difficult operating conditions in general continue to hamper production efforts. Even cleaning materials for the factory have become hard to source! Delays in shipping documents continue to be a frustration due to lack of available couriers. The numbers make everything clear if you had any doubts, compared to the 110,000 tonnes exported under usual conditions Jan-Sept ’19 we have seen a mere 70,000 tonnes exported Jan-Sept 2020, 37% down. All coconut related product exports YTD stand at 1,046,413 tonnes, compared to 1,586,228 tonnes for the same period last year, 34% down. 

First Grade’s shippers have done wonders to maintain shipments for the UK market. This, along with our large buffer stocks, has enabled us to deliver all our contracts on time and in full which is nothing short of miraculous considering the circumstances. Most of the industry has been up to 8 weeks late on shipments and some contracts were even cancelled under ‘Force Majeure’. 

Whilst raw nut supply has remained in good shape and the forward crop conditions look favourable, prices are increasing. This is a result of higher operating costs, reduced outputs, and a recent surge in coconut oil levels due to the global vegetable oil market making a recovery. Coconut oil has risen from in the $800’s earlier this year up to $1100 on the futures market into next year. 2021 pricing looks set to be at a higher level than 2020 and reduced output looks set to continue. Global demand for Desiccated Coconut (a low-priced commodity) has remained stable after faltering when Covid first hit, therefore the price appears set to remain firm for 2021. The only coconut product we are seeing in reduced demand is Coconut Water. This has been clearly impacted by the lack of ‘on the go’ sales in drinks and food service opportunities.  Please contact us for some special offers in this area as we have some very attractive pricing available.


The virus arrived in Indonesia much later than Europe or the Philippines. Lockdowns were not introduced as we have seen elsewhere in the world. This is now changing as the virus takes hold and the Government has been making local lockdowns where virus spikes occur.

The Desiccated Coconut industry has seen strong demand due to the lack of Philippine shipments and most factories are sold out for nearby delivery. Prices have firmed mainly just due to demand. They do however remain attractive compared to Philippine if buyers can accept the quality, as few meet the stringent standards the UK market requires. 

Our main Coconut Milk supplier Sambu, in Sumatra, has coped well under the virus and strictly enforced virus control measures. They are restricting contact with the outside world from their isolated community as there is no road access to Sambu. 

The impact of Covid has hit many coconut businesses financially. We have seen one supplier collapse (PT Harvard) and another large milk producer lay off many workers to the point where shipments have almost come to a standstill. This, in conjunction with the rise in the price of Coconut Oil, sees Indonesian prices tracking upwards. We expect 2021 levels to be above those of 2020 with levels released by November time.

Sri Lanka

We saw Sri Lankan prices fall rapidly earlier in 2020 as the Government reduced the import tariff on imported Coconut Oil, which previously held up the domestic raw material price. At one-point Sri Lankan milk prices almost matched Indonesian for the first time in recent history. This was short lived however, as a combination of lockdown, reduced shipments and then a returning levy escalated raw material prices exponentially in recent weeks. The market is now over US$600 per tonne higher for Desiccated products and there have been defaults in the market.

General Overview

All factors considered, the forward outlook for coconut related products looks bullish and we recommend cover through to March 2021 as a minimum. Supply continues to be disrupted and shipments delayed therefore we recommend contracting with suppliers who have over 7000 pallets in stock!

First Grade have developed many new (some unique to the industry) products delivering both costing saving initiatives and outstanding quality. Please speak with your account manager to explore how these may be used within your business.