After a steady rally in the past few months, coconut oil prices have begun to ease in the Tamil Nadu market. While unseasonal rain had dampened conversion of copra into coconut oil in the past few weeks, farmers have now begun unloading raw coconuts at Kangeyam, a major market and growing area in Tamil Nadu. While coconut oil continues to rule at Rs 101 a kg in the Kerala market, it has dipped to Rs 97 in Tamil Nadu.

Huge arrivals of raw coconut could cause restiveness among the local farmers, and there is every indication that the prices would fall further, a trader from Kangeyam said.

Tamil Nadu is not a big consumer of coconut oil and is dependent more on industrial demand to ensure price stability. And going by the experience of previous weeks, the industry was not too happy with the high prices and was exploring other options for cheaper oils.

Mr Thomas Mathew, Chief Coconut Development Officer, said that but for premium quality soaps, shampoos and some cosmetics where the demand for coconut oil is inelastic, the general industrial demand depends directly on prices. Coconut oil is used in the manufacture of baby foods too, on account of the high level of loric acid it contains.

Sell mode

The industrial demand is likely to pick up in a big way only after the market dips further. The market seems to be entering a sell mode and further price correction can be expected, Mr Prakash B. Rao, a Cochin Oil Merchants Association (COMA) memeber, said. Copra prices also fell to Rs 66 a kg, from Rs 73 last week.

But coconut oil prices are not expected to tumble rapidly because of the high prices of competing vegetable oils in the global market.

Palm oil prices ruled steady at Rs 61 a kg, and so did palm kernel oil, at Rs 95 a kg.

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