Staying cool is becoming costlier this summer due to a sharp rise in coconut oil prices, a vital ingredient in ice cream. By May 2025, wholesale prices hit $2,800 per tonne, double the previous year’s rate, driven by droughts caused by El Niño in major producing countries — the Philippines and Indonesia, which supply 75% of global coconut oil.
Ice cream prices have already jumped; for example, UK supermarket ice lollies and cones rose 7.6% in May, according to RIFT. Coconut oil is favored in industrial ice cream for its high melting point and neutral flavor.
The situation is worsened by:
- Philippine biofuel policies, increasing coconut oil use in diesel blending (set to rise to 5% by 2026), diverting supply from food use.
- Global output cuts, with the USDA projecting a 5–10% drop in coconut oil production this season, with low output likely continuing into 2026.
- Growing demand in beauty and wellness sectors, as well as increased substitution of cocoa butter with coconut oil due to surging cocoa prices.
However, supply cannot quickly meet rising demand — coconut trees take over a year to mature, and expansion is limited by environmental regulations and deforestation concerns. La Niña is also expected to bring floods, disrupting production further.
With demand outpacing supply, coconut oil prices will remain high, keeping ice cream and related products expensive through 2025 and beyond.
