Sizeable arrivals of coconut at Tamil Nadu markets and a delay in onset of Onam festival demand from Kerala have dragged coconut oil prices this week.
Mr Prakash B. Rao, Vice-President, Coconut Oil Merchants Association (COMA), said that prices of coconut oil and copra witnessed a bearish trend due to a lower-than-expected demand for the festival season in Kerala.
Prices of coconut oil declined to Rs 60 a kg against Rs 62 quoted last week. The copra prices also declined to Rs 4,100 a quintal in Malabar area, which is the main producing centre in the State. Copra prices in Kerala stood at Rs 4,300 a quintal last week, he said.
In Tamil Nadu, coconut oil rates dropped to Rs 58 a kg from Rs 59 quoted last week and copra prices also remained weak to Rs 3,800 a quintal on higher arrivals. Copra prices in Tamil Nadu last week ruled at Rs 4,000 a quintal.
However, there were only few enquires from corporates and industrial buyers as prices of palm kernel oil, which is a substitute of coconut oil, crashed to Rs 62 a kg from Rs 70 a kg quoted last week, he said.
Most of the industrial buyers, mainly soap manufacturers, have shifted to palm kernel oil, which is likely to affect the coconut oil prices in the short-term, he added.
Mr Thalath Mahamood, President, COMA, said that local demand is expected to pick up in the coming weeks due to Onam and Ramzan. However, he expressed concern over the move of the Government to distribute edible oils at subsidised rates, saying that this will affect local demand for coconut oil.
Mr Bharat N. Khona, former Board Member, COMA, said that market is weak due to deficit monsoon. Good rains in the coming weeks are expected to help the market sentiments. Due to a daily decline, he said traders are reluctant to enter the market for purchases.
Meanwhile, a report prepared by the Agricultural Market Intelligence Centre of the Kerala Agriculture University revealed that the market anticipation of demand for coconut oil or copra from North India towards Diwali festivities is likely to be lower.
On the other hand, the mounting edible oil imports to contain a possible price rise during the festival time may hurt the coconut oil prospects because the lion’s share of such imports are RBD palmolein.
Quoting Solvent Extractors Association of India, the report said that the import of vegetable oils during the first 8 months of the current oil year from November 2011 to October 2012 is 6.39 lakh tonnes compared with 5.13 lakh tonnes last year. This represents an increase by more than one lakh tonnes, whereas the import of refined palm oil has more than doubled during the corresponding period.