With Onam sales expected to be lower this year, coconut oil prices are likely to dip further in the coming weeks. Indications to this effect are evident with the wide price differential between Kerala and Tamil Nadu markets. Coconut oil prices are quoting at Rs 90 a kg in wholesale markets of Kerala against Rs 81 in Tamil Nadu.

Kerala traders and companies engaged in retail packing and selling operations have built up sufficient stock to tide over Onam demand. But with reports indicating a 25-30 per cent slump in retail sales, they might be left with huge stock than they had bargained for. Consequently, there is poor demand from Kerala and the flow of coconut oil from Tamil Nadu has all but dried up. But, the high price differential has induced some Tamil Nadu stockists and traders to sell at lower prices in Kerala markets, sources in the trade said.

Likely spot price dip

They pointed out that the September futures prices are still quoting at Rs 8,300-8,400 a quintal range and there is every likelihood that spot prices would dip further. But for the poor demand in the spot market, traders would have minted money buying in the futures market and selling in the spot market. Spot prices are expected to fall further before the expiry date for the current series.

Onam demand continues to be suppressed mainly due to the high coconut oil prices, sources in the trade said. Palm oil prices were quoting at Rs 58 a kg while palm kernel oil was fetching Rs 74 a kg. Corporate buyers are also waiting in the sidelines for the Onam demand and prices to subside before re-entering the market in a big way. Copra was quoting at Rs 58 a kg in Kerala against Rs 54 a kg in Tamil Nadu.

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