Coconut oil manufacturers are sceptical about a rally in prices, at least in the short term, at a time when rival edible oils are moving north.

Multiple industry sources, including Coconut Development Board officials whom BusinessLine spoke with, cited surplus production in the growing regions for the fall, thanks to favourable climatic conditions in the last two harvest seasons.

They expect the current harvest also to be a good one, which would put further pressure on prices.

Surplus copra

Copra rates have dropped by ₹10-12 per kg in the past week and are at ₹82 per kg in both the Kerala and Tamil Nadu markets currently. At the same time, coconut oil prices have declined to ₹140 in Kerala, and to to ₹123 in Tamil Nadu on surplus production and availability of copra at cheaper rates.

The decline in prices of both copra and raw coconut has put farmers in a spot of bother as there are no takers for their produce. Raw nut prices have dropped to ₹24 per kg from ₹28 in a month. Earlier, the Tamil Nadu industry used to procure raw nuts from Kerala, but they have been forced to stop because of surplus production there. 

According to Thalath Mahmood, director of the Cochin Oil Merchants’ Association (COMA), the market has been witnessing a weak trend for quite some time without any support from local buyers.

He said the National Agricultural Cooperation Marketing Federation (NAFED) should procure copra from the open market rather than from farmers, which would benefit the sector, including the farming community, in a big way. ‘

The current procurement of raw coconut at a floor price of ₹160.90 per quintal is a slow process and farmers are reluctant to come forward because of the procedures involved.

Ubais Ali of Mezhukkattil Mills said the last two harvest seasons were good, which had led to a surplus stock of copra. The current fresh crop has ensured improved availability in the market this year as well. Demand for value-added products in the overseas market has also been sluggish and prices were likely to go up only on a surge in international demand.

K.K. Devraj, a business consultant, said the migration from coconut oil to sunflower oil has taken place among the younger generation on health grounds. This category falls in the middle or upper middle-income category. Therefore, reverse migration in the group is unlikely, despite the price difference.

Besides, the palm oil consuming sector is the hotel, restaurant and catering segment and the low-income group. They will shift to coconut oil at lower prices, which will support the coconut sector. But the availability of cheaper oil from Tamil Nadu will give farmers there a price advantage, and not in Kerala, he said.

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