Coconut oil is unlikely to gain during the ensuing Onam festival season when the consumer demand normally goes up, given the declining price trend in other edible oils.
Coconut oil producers said the market is witnessing a subdued demand and they are sceptical of a price rally in the near term, especially when edible oils prices are sliding.
Thalath Mahmood, Director, Cochin Oil Merchants Association (COMA), told BusinessLine that the market has been witnessing lower consumption reportedly due to a liquidity crunch. Besides, oversupply has also led prices to stagnate, hovering in the range of ₹150 in the wholesale market. The situation is similar with copra where prices are ruling lower at ₹85-90, he said, citing bumper production in South India as a reason for the market glut.
Ruling out any adulteration of coconut oil in the market to meet festival demand, he said such a situation does not arise when prices are showing a declining trend. He blamed the mushrooming of small-scale units in the State for coconut oil sales that had hit the market of organised players.
Export market down
“We are sceptical of an immediate rise in consumption in the current festival season amid cash crunch in the market. A good harvest has resulted in oversupply that has impacted the prices”, Ubais Ali, CEO, Mezhukkattil Mills, said. The export market is also down due to the prevailing recessionary trend, he said, adding a price rally can be expected by the end of the year when the demand-supply situation improves.
According to KK Devraj, a business consultant in Kochi, prices of edible oils in the global market have been softening over the last three to four months. This is mainly due to the accumulation of palm oil stocks in Indonesia and Malaysia, which is now in the peak production season. Also, the prices of soft oils have started receding from the pre-sanction periods after the Ukraine war. In India, all major edible oil players have drastically reduced prices to consumers by over ₹30-40 per litre. Consumer demand for edible oils is said to be stable and as such manufacturers will be able to offer lower prices to consumers due to higher volumes.
Coconut oil has also seen prices fall on par with the movement of other edible oils prices. Though prices of other edible oils are higher than that of coconut oil, there has not been a large-scale reverse migration to coconut oil. Since the next few months are normally lean production months in Kerala, he said the Tamil Nadu coconut oil and cheaper palm oil, sunflower oil etc. may further hit the Kerala coconut oil market, which should be a cause for worry to the local manufacturers.