Coconut oil prices likely to remain steady till January 2012

With global coconut oil availability remaining depressed as couple of recurrent typhoons lashed the coast of Philippines and beetle infestation and drought in the coconut plantations of Thailand has reduced coconut production from couple of the biggest producers in the world, prices are likely to remain firm globally. Barring Indonesia, coconut production has been reeling among the big coconut producers this year.

In the Indian subcontinent, the area under coconut cultivation has been drastically declining in the biggest producing State of Kerala due to a host of factors like unsteady prices, high wages, shortage of labour, high incidence of pests and diseases, declining crop productivity and low profitability compared to other commercial crops like rubber.

Global shortage

It is in this backdrop of global shortage of coconut oil along with a host of other pull and push factors that the Market Intelligence Centre of the Kerala Agricultural Centre of the Kerala Agricultural University has concluded that coconut oil prices in the country are likely to remain firm till January 2012.

A recent study conducted by Dr K Satheesh Babu, Ms K Jayasree and Ms P Resmi has pointed out that the supply shortfall from the State has been widely met with heavy arrivals from Tamil Nadu. However the advancing north-east monsoon along the coconut growing regions of Tamil Nadu and Karnataka is likely to hamper the harvest operations.

The intermittent rains are also likely to reduce the conversion process to copra and suppress coconut oil production. With supply from Tamil Nadu coming under pressure the prices are likely to firm up in Kerala till January-end next year when the major production season in the State is expected to start.

The corporate buyers who have been keeping away from the market are likely to come back as the winter season advances and the demand for coconut oil based soaps and shampoos re-surfaces. The strong dollar was also viewed as a big deterrent to increased imports of edible oils, the prices of most of which are expected to remain stable.

The high price differentials between coconut oil and palm oil has also forced changing loyalties among traditional coconut oil users, a significant number of them now shifting to cheaper palm oil. This has resulted in large scale constriction in demand by the household sector which constitutes the biggest consumer segment in Kerala.

The demand for tender coconut among the people of southern States has also begun to wane as winter advances, enabling greater conversion to copra and coconut oil. However, the demand especially from Kerala is expected to keep the prices firm, the study pointed out.