Coconut oil price plunges with no takers

With traders unwinding their stocks in a plummeting market, coconut oil prices have touched new lows. There is virtually panic selling in the market as traders want to dispose of their existing stocks before entering the market at lower levels, sources in the trade said.

The sharp fall in the price of palm kernel oil has further dampened coconut oil prices.

Coconut oil was quoting at Rs 74 a kg in Kerala wholesale markets against Rs 80 during last week. It has fallen to Rs 68 in Tamil Nadu against Rs 74 last week. The plunge in palm kernel oil price to Rs 58 per kg was a major trigger for the fall. Palm oil was quoting at Rs 53 per kg. Reports indicate that there has been a build up in the inventory of palm oil and palm kernel oil in the market. In the meanwhile copra prices were quoting at Rs 50 per kg in the Kerala markets as against Rs 48 in Tamil Nadu.

The prices have plunged by over Rs 20 in the last one month and there could be respite from the fall in the coming weeks, sources in the trade said. If the price of coconut oil stabilises in the coming weeks, it could eventually lead to a pull back. The people who had undertaken short selling in falling futures market would be forced to resort to short covering.

Once stability returns to the market, industrial buyers could step in and prices could recover. Moreover, upcountry demand is also likely to resurface with the onset of the upcoming Diwali season.

The imminent onset of the North East monsoon over Tamil Nadu could also reduce coconut conversion to copra and further to coconut oil and reduce arrivals. This could also bolster coconut oil prices. Traders felt that if coconut oil prices stabilise in the coming weeks, the price recovery could also become a reality.

Evening reports indicate that panic selling has ceased in the market and stability seems to returning to coconut oil markets in South India.

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