The decision of a leading copra buyer to drop buying price from the open market has created panic in the coconut oil market this week.
Prakash B. Rao, President, Cochin Oil Merchants Association (COMA), told Business Line that the corporate firm, who is an aggressive copra buyer from the open market, has dropped the buying price at Rs 2 per kg.
The company has lowered its procurement price at Rs 41.50 per kg against Rs 43.50 per kg last week and this has impacted the market sentiments, he said.
According to Rao, the coconut oil market has further crashed to a new low due to weak sentiment in overall edible oils.
In Tamil Nadu, coconut oil prices touched a new low of Rs 51.50 per kg (Rs 55) and copra fell to Rs 3,700 per quintal (Rs 3,750).
Prices in Kerala market too have dropped to Rs 57 per kg (Rs 59) and copra prices to Rs 3,900 per quintal (Rs 4,000).
Sentiments for the coming days are reported to be weaker. Major corporates have reduced their intake on anticipation of a further drop in prices, he added.
Edible oils are also ruling at a two-year low on account of better production in Malaysian markets. At present, palm oil prices are ruling at Rs 54 pr kg (Rs 57), while palm kernel oil is trading at Rs 52 per kg (Rs 54).
P.G.K.Koshy, President, COMA, said that shifting from coconut oil to other less costlier edible oils by soap manufacturing companies has resulted in declining prices of coconut oil.
Besides, the piling up of stocks with major importers of edible oils in the country has also created less demand for coconut oil. Coconut oil, he said, has now become the cheapest among edible oils in India.
Bharat N. Khona, former Board Member, COMA, said that market is sliding day by day due to weak sentiments.
Low prices of other edible oils have also impacted the coconut oil market. Corporates and upcountry buyers are watching the situation and he hopes that they may enter once the market stabilises.