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Prices of milling copra have plunged to ₹104 per kg in Kerala and ₹100 per kg in Tamil Nadu’s Kangeyam on subdued corporate buying during the pandemic times.
Trade sources said that the Kerala Government’s entity Kerafed and a leading Mumbai-based coconut oil manufacturer are the major agencies involved in copra procurement and the lower demand for coconut oil have forced them to reduce their copra intake from the market.
The sources said that these agencies are waiting for the prices to drop further, as a significant amount of copra is arriving in the markets with the start of harvest season in all the production centres.
Earlier, majority of the traders resorted to hoarding, citing logistical issues when prices surged. Now, the price drop has forced them to release the stocks, leading to huge arrivals in the market.
Ubais Ali, Executive Director of Mezhukkattil Mills, a leading player in the coconut oil industry, said that the domestic copra price is hovering below the international price ruling at $1,100 per tonne. Higher domestic consumption has curbed exports. If copra prices fall further, there is a possibility of a copra shortage as their exports could increase.
Weak buying due to pandemic
Thalath Mahmood, Director, Cochin Oil Merchants Association, said that the drop in copra prices has begun to reflect in rates of coconut oil, which have declined to ₹169 in Kerala and ₹148 in Tamil Nadu. He attributed the reasons to Covid which resulted in weak buying across the consumer segments. There has been a 50 per cent drop in domestic consumption of coconut oil mainly because of the closing down of catering units, restaurants, and lower purchasing power of people. “Onam festival season starts next month in Kerala that normally perks up coconut oil demand. But, this time, traders are keeping their fingers crossed on the revival of demand,” he said.
The price drop in other edible oils which is available at ₹130-150 range in the retail market has also hit the demand for coconut oil. The inclusion of coconut oil in the food kits supplied by the government through PDS has also affected local sales including that of affluent families who prefer coconut oil as their cooking medium irrespective of its prices, he added.
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