Coconut oil market continued to slide for the second consecutive week in Kerala due to ample availability of substitute oils in the market.
In Kerala, prices have dropped to Rs 59 a kg from Rs 60.50 last week, while in Tamil Nadu, it was quoted at Rs 55 against Rs 55.50 last week. Palm oil prices have declined to Rs 57/kg (Rs 58), whereas palm kernel oil at Rs 54 (Rs 57). Prakash B. Rao, President, Coconut Oil Merchants Association (COMA), said that ample stocks of palm oil and palm kernel oil are now available with large importers and this has resulted in coconut oil slipping. It is estimated that around 10,000 tonnes of palm kernel oil and 20,000 tonnes of palm oil are now available with wholesale importers, he said. Historically, it has been seen that the coconut oil market is directly related to the substitute palm kernel oil and palm oil, he said.
However, industrial buyers, especially soap manufacturers have shown some interest in buying coconut oil at this price level. The copra prices had also come down at Rs 4,000 (Rs 4,150) a quintal in Kerala; in Tamil Nadu, the prices stood at Rs 3,750 (Rs 3,900), he said.
Thalath Mahamood, President, COMA, attributed the reason to price crash to the government policy on procurement. The government agencies are procuring only limited quantity of copra at minimum support price.
The quantity so far procured is negligible to impact the market. The agencies should have procured at least one lakh tonnes to stabilise the market. He also warned the agencies move to sell procured copra in the open market. This would have a negative impact in the market, he added. Bharat N. Khona, former Board Member, COMA, said the market is going down because of steep fall in Malaysian palm kernel oil market. At the same time, the other oil markets are also going down. Corporates and upcountry buyers are watching the situation and he hoped that they may enter once the market stabilises.