As we enter Q4, supply remains steady for the time being, but the next cycle of El Nino has begun, and many major coconut growing regions have already seen decreased rainfalls over the last few months. Expectations are that lower yields will start already Q2 2027. All reports suggest that this will be strongest El Nino on record with devastating effects likely to be felt throughout 2027.
Shipping:
Ocean freight rates have been on the rise over the last number of months due to on-going geopolitical conflicts disrupting shipping lines, raising operation, energy costs, and causing unpredictable demand on uncertain markets. Rates have not been this high since the astronomical levels of shipping rates during 2021/2022.
Current transit times ranging 45-60 days.
Things to consider as we conclude 2026 and look to 2027:
We have reached the end of peak season. With all indications pointing to 2026/2027 El Nino season to be the strongest on record, we expect at the very least to begin to see lower yields by Q2 and worsening through the remainder of 2027.
EUDR initiative (law requiring companies to prove that goods exported are not produced from recently deforested land) is also to be implemented by the end of 2026. In many cases this initiative will favor Crude Coconut oil (CNO) over Crude Palm Kernal oil (CPKO) exports. As such it will also have upward pressure on pricing on all coconut products for 2027.
Increased fuel costs due to ongoing conflict around the strait of Hormuz and beyond will continue to push pricing higher as operational and logistical costs continue to rise
With El Nino season, also brings the possibility of stronger storms. If a strong storm were to hit major growing region, we could see immediate disruptions to a supply already under pressure for next year and under these circumstances we could very quickly return or even surpass the unprecedented levels of 2024/2025 pricing experienced during last El Nino cycle.
Given current market conditions, we are expecting prices to rise as early as the end of this year and continue to increase as supply situation worsens throughout 2027.
It is our recommendation to book now for all requirements for 2027 as many of the mills still have capacity for remainder of 2026, but this space is being booked fast.