Coconut Crash in Thailand vs Firm Indian Demand: What It Means for EU Buyers

Thailand’s coconut market is in a severe price slump, with farm-gate values collapsing far below production costs even as export prices stay relatively high. At the same time, Indian and global consumer markets remain structurally firm, keeping prices for processed coconut products in Europe broadly stable. This divergence between raw nut oversupply in Thailand and resilient downstream demand is shaping trading margins, procurement strategies and risk for 2026. Thailand’s growers report that coconut prices have dropped from pre‑pandemic levels of about USD 0.55 per fruit to recent levels of around USD 0.28, and currently to as low as USD 0.06, with lower‑quality fruit at USD 0.03. At these levels, many farmers are operating below cost and are leaving crops unharvested or even considering cutting trees, signalling deep distress and a risk of supply destruction if prices do not recover. Oversupply is the core problem: production has surged, with Thailand now producing around 2 million coconuts daily, and total supply up more than 55% in 2025 while exports rose only 9.7% and total export value reached roughly USD 200 million. This imbalance has driven Thailand’s average farm‑gate prices to around USD 0.09 in February, down from USD 0.16 in December, despite authorities stepping in to buy at about USD 0.14 per fruit. A small group of export‑oriented companies, many linked to Chinese investors, reportedly dominates procurement and exports, paying farmers USD 0.06–0.14 per fruit while export prices fetch USD 0.97–1.39 per fruit. This wide spread has heightened concerns about competition, bargaining power and profit distribution along the chain. In contrast, India – and particularly the southern states – is facing a tighter raw coconut balance, with several recent seasons marked by production challenges and strong domestic demand. Kerala and Tamil Nadu have seen periods of sharply higher coconut and coconut oil prices due to yield losses from pests, climate variability and disease, and a heavy pull from both edible and industrial uses. While prices have started to fluctuate from these peaks, they remain structurally much higher than the distressed levels seen in Thailand’s nam hom segment.

Prices & Market Structure

Thailand farm‑gate vs export price spread

The Raw Text indicates an extremely compressed farmer price and relatively resilient export price:

• Pre‑pandemic: ~USD 0.55 per fruit
• Recent: ~USD 0.28 per fruit
• Current: USD 0.06 per fruit (low‑quality at USD 0.03)
• Average Feb price: USD 0.09 vs USD 0.16 in December
• Government intervention buying around USD 0.14 per fruit
• Export prices: USD 0.97–1.39 per fruit

This structure implies that value is increasingly captured downstream, particularly by export consolidators. Farmers bear the brunt of oversupply, while exporters still realise near‑USD 1 per fruit on international markets, especially in China‑bound aromatic coconut trade.

Processed coconut prices in Europe (converted to EUR)

Using the given product offers (FOB/FCA, last updated March 2026) and applying a simple 1.00 USD ≈ 0.92 EUR heuristic where needed, we present all prices in EUR. Since the offers are already quoted in EUR, no conversion is necessary.

These values show that, despite the Thai farm‑gate crash, desiccated and flake coconut offers in Europe have been flat over the last four reporting weeks. The oversupply in Thai aromatic coconuts has not yet translated into broad‑based price erosion in processed segments, partly because Thailand’s surplus is concentrated in fresh nam hom and logistics and specification constraints limit quick arbitrage into EU desiccated markets.

Indicative Indian domestic context (per nut, converted to EUR)

Recent Indian reporting highlights periods where coconut prices surged in key wholesale markets such as Kerala and Tamil Nadu, before easing back from peaks. Wholesale prices in major mandis like Kottarakkara and Pollachi have at times ranged from roughly ₹30–60 per nut, with coconut oil prices in Kerala reportedly moving toward ₹340–399 per kg at their highs before softening. Even after recent corrections, this trajectory contrasts starkly with the USD 0.03–0.06 levels reported for Thai farmers.

Supply & Demand Dynamics

Thailand: structural oversupply and export dependence

The Raw Text clearly points to a supply shock on the Thai side. Coconut production has surged, with daily output around 2 million nuts and 2025 supply more than 55% above prior levels. Exports, however, increased only 9.7%, with total export value near USD 200 million, leaving a substantial surplus in the domestic market.

Thailand’s nam hom aromatic coconut segment is heavily tied to Chinese demand, and over 80% of wholesale trade is reportedly controlled by external players, many linked to Chinese investors. With a small group of companies dominating procurement and exports, farmer bargaining power is limited. This concentrated structure explains why export prices can remain around USD 0.97–1.39 per fruit even as farm‑gate prices collapse.

External reporting is consistent with this picture, noting that farm‑gate prices in Songkhla province fell to 2–3 baht (roughly USD 0.05–0.08) versus production costs of 4–5 baht (USD 0.11–0.14), clearly below breakeven. This validates the Raw Text’s core signal: severe margin compression at the farm level amid only modest relief from exports.

India: tightness, demand resilience and festival spikes

In India, by contrast, the main story is not oversupply but intermittent tightness due to climate shocks, pests, disease and labour constraints. Kerala – historically coconut‑rich – has seen falling production and rising dependence on Tamil Nadu and other states, even as local demand for fresh nuts, copra and oil has stayed robust.

Festivals such as Onam and Ganesh Chaturthi periodically push demand higher, leading to price spikes for both fresh coconuts and coconut oil. While prices corrected somewhat after mid‑2025 peaks, domestic values remain far from the distress levels faced in Thailand. This divergence underscores that the Thai glut is regionally concentrated rather than a universal coconut surplus.

Global trade: shifting flows and China’s role

The Raw Text underlines how dependent Thailand’s aromatic coconut exports are on China. As Vietnamese suppliers accelerate exports of both fresh and processed coconuts to China – with reports of several‑hundred‑percent growth in 2025 – Thai exporters face stiffer competition and weaker bargaining power.

At the same time, Indonesia and the Philippines continue to dominate desiccated coconut exports to Europe, where demand is relatively stable across bakery, confectionery and health‑food segments. This helps explain why EU‑landed desiccated prices remain steady even as Thai fresh‑nut prices collapse.

Fundamentals & Policy Environment

Input costs and fertilizer disruptions

The Raw Text notes fertilizer supply disruptions linked to tensions around the Strait of Hormuz. Higher and less predictable fertilizer costs squeeze farmer margins and may lead to under‑application, which risks yield declines in the medium term. For smallholders already getting USD 0.06 per fruit, input rationing is likely, potentially undermining future productivity.

In India, similar input‑cost pressures interact with climate variability and labour shortages, but output there has trended tighter, with evidence of yield losses in parts of Kerala and Tamil Nadu. This contrasts with Thailand’s situation, where yields and output have surged faster than market absorption, at least in 2025.

Government support and market regulation

Thai authorities have begun purchasing coconuts at around USD 0.14 per fruit, above the current market low but still below historic norms. This acts as a partial price floor and may reduce the incentive for tree‑cutting, but it remains modest relative to the 55% jump in output. Investigations into procurement practices suggest that policymakers are aware of the dominance of a few exporters and potential anti‑competitive behaviour.

In India, various state and federal initiatives – including support prices for copra and intervention through co‑operatives – have historically aimed to stabilise farmer income. Kerala’s cooperatives and marketing federations procure copra and oil to mitigate extreme volatility. Yet, even with such policies, the region has experienced both sharp price booms and subsequent corrections in recent years, underlining the difficulty of managing cyclical imbalances.

Weather Outlook for Key Growing Areas (India Focus)

Given the user’s Indian region focus, the weather outlook centres on major coconut belts in Kerala (around Kochi) and Tamil Nadu (around Chennai) for the next 7 days starting 18 March 2026.

• Kochi, Kerala: Forecasts indicate mostly sunny to partly cloudy conditions with highs around 30–31°C and lows near 25–27°C over the coming week, with only isolated thunderstorms expected. Soil moisture should remain adequate following prior seasonal rains, and no extreme heat or cyclone‑related stress is foreseen in the immediate term.
• Chennai, Tamil Nadu: The outlook points to partly sunny, hot and humid conditions, with highs of 33–35°C and lows of 24–25°C, plus scattered showers or thunderstorms on some afternoons. Such weather is broadly normal for this period and should not materially disrupt coconut flowering or nut development in the near term.

In both regions, the short‑term weather picture is neutral‑to‑slightly supportive for coconut orchards: no major drought signal and no acute storm threat in the coming week. Medium‑term risks remain tied more to structural climate shifts, pest pressure and labour availability rather than immediate weather shocks.

🌐 Global Production & Stocks Snapshot

While precise latest global stock figures for 2025–26 are still being consolidated, structural patterns are clear. India remains the world’s largest coconut producer in tonnage, led by Karnataka, Kerala, Tamil Nadu and Andhra Pradesh. Many of these regions are currently operating under tighter supply conditions than Thailand.

Thailand’s situation, by contrast, involves a rapid production expansion concentrated in aromatic varieties, creating a localized glut. The Raw Text’s 55% supply growth in 2025 against just 9.7% export growth implies a sharp rise in domestic stocks, especially of export‑grade nam hom types that cannot easily be diverted into low‑value domestic uses without further depressing prices.

For EU buyers, the implication is that upstream fresh‑nut oversupply in Thailand and parts of Vietnam may create selective opportunities in specific product lines (e.g., aromatic drinking coconuts, some value‑added beverages), but does not automatically translate into ample global stocks of desiccated coconut, coconut milk powders or high‑fat flakes. Those segments still depend heavily on Indonesia, the Philippines and India, where supply conditions are tighter.

Risks & Market Drivers

Key downside risks (for prices)

• Prolonged Thai oversupply: If Thailand maintains production at current levels without closing the export gap, farm‑gate prices could remain depressed longer than expected, especially in the nam hom segment.
• Chinese demand slowdown: Any softening in China’s import appetite for fresh aromatic coconuts – due to economic factors or shifting preferences – would worsen the Thai surplus and increase pressure on exporters to discount.
• Logistical constraints: Ongoing logistical issues highlighted in the Raw Text could limit Thailand’s ability to clear surplus through new destinations, keeping domestic stocks elevated.

Key upside risks (for prices)

• Farmer supply response: Persistently below‑cost prices may drive tree removal, reduced input use and lower harvesting intensity in Thailand, tightening medium‑term supply and supporting prices into and beyond Q3 2026.
• Processing demand growth: The Raw Text mentions that recovery hinges on boosting processing demand. If new processing capacity for coconut water, milk or snacks scales up, it could absorb part of the surplus and lift farm‑gate prices.
• Weather or disease shocks elsewhere: Further production setbacks in India, Indonesia or the Philippines from climate or pests could tighten global availability of processed coconut products, keeping EU prices firm or pushing them higher despite Thai oversupply.

Price Outlook & Scenario to Q3 2026

The Raw Text explicitly projects that Thai coconut prices may improve toward USD 0.21 per fruit by Q3 2026, assuming some progress in reducing surplus and expanding processing demand. This would still be well below the pre‑pandemic ~USD 0.55 level but represents a more sustainable level than the current USD 0.03–0.06 distress range.

Given stable EU desiccated and flakes offers (1,950–4,650 EUR/mt depending on origin and specification) and absent major weather shocks, our base case is for a broadly sideways price profile in Europe through mid‑2026, with modest downside risk in lower‑grade conventional desiccated if more Southeast Asian supply comes to market. Premium and organic segments are expected to remain relatively firm, supported by health‑oriented demand and limited certified supply.

Trading & Procurement Outlook

Actionable recommendations

• EU buyers of desiccated & flakes: With Indonesian and Philippine offers stable around 1,950–2,700 EUR/mt FCA/FOB for mainstream grades, consider maintaining normal‑to‑slightly‑above‑normal cover for Q2–Q3 2026. Upside demand risks in food and confectionery plus potential weather issues in South Asia argue against running short.
• Beverage and fresh‑coconut importers: The Thai nam hom glut offers an opportunity to renegotiate supply contracts, pushing for better terms or value‑added services while ensuring farmer‑support clauses where feasible to manage reputational risk.
• Indian processors and traders: Use the Thai oversupply as a hedge by exploring blended sourcing strategies for certain value‑added products where quality specifications permit. However, domestic demand and logistics may still make local procurement essential for many lines.
• Producers in Thailand: Short‑term, maximize participation in government procurement schemes and focus on cost control. Medium‑term, evaluate conversion of part of the orchard to higher‑value integrated systems or intercropping to reduce dependence on volatile coconut prices.
• Investors and processors globally: The spread between Thai farm‑gate (USD 0.06–0.14) and export (USD 0.97–1.39) suggests scope for investment in more equitable contract farming or processing at origin, capturing value while improving farmer margins.

3‑Day Regional Price Forecast (Indicative, in EUR)

Based primarily on the Raw Text’s weak sentiment for Thailand and stable EU offer data, plus neutral short‑term weather in India, the following indicative 3‑day outlook is provided for key reference points. These are directional assessments rather than tradable quotes.

Over this very short horizon, the dominant signals are continued weakness and structural oversupply in Thailand, contrasted with steady EU processed‑product prices. Any meaningful inflection in Thai farm‑gate values is more likely on a multi‑month horizon, as surplus is gradually reduced and processing capacity expands, potentially lifting prices toward the Raw Text’s projected USD 0.21 per fruit by Q3 2026.