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Despite the onset of the peak production season and increased arrivals in the Kerala market, coconut oil prices continued to climb last week.
Prices were quoting at Rs 94 a kg in the Kerala market while they were marginally lower at Rs 92 a kg in the Tamil Nadu markets. The prime reason for the unusually high price was the paucity of arrivals from Tamil Nadu, sources in the trade said.
Even increased output of coconut during the peak production season is not sufficient to meet the consumption needs of Kerala and arrivals from Tamil Nadu have become essential to buttress the demand from the State.
Ever since State Assembly elections were announced, arrivals from Tamil Nadu have decreased and prices have spurted in Kerala, trade sources said.
But the situation is not likely to last for long, Mr Prakash B. Rao, Member of the Cochin Oil Merchants Association (COMA), said. The peak production season is likely to set in over Tamil Nadu in another two to three weeks and elections are likely to be over by then.
While Mr Rao did not see any likelihood of the prices correcting during the current week, he did not rule out the possibility of the prices taking a major plunge, two to three weeks from now.
Moreover unlike other major edible oils, coconut oil production is restricted to a few States and the volumes involved are a fraction of other major edible oils. The consumption pattern is also restricted to a few States and to a few industries.
So price fluctuations are more volatile depending on the production and demand trends, sources said. These localised price disparities happen over and above the price fluctuations which occur for edible oils at the national level.
And the trend seems to be occurring even now. While prices of most other major edible oils have corrected significantly in the last month coconut oil alone has been on an upward spiral.
Prices of palm oil, palm kernel oil and sunflower oil all registered declines in the recent past. As coconut oil prices continue to rule steady, industrial demand has been coming down.
Copra prices are ruling at Rs 65 a kg in Tamil Nadu and Kerala markets. Among competing edible oils, palm oil prices are quoting at Rs 58 a kg while palm kernel oil is quoting at Rs 90 a kg.
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