Commodities

Coconut oil stays firm in Kerala

| | Updated on: Jan 12, 2011
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Coconut oil prices continued to hold firm in Kerala even as some weakness was evident in Tamil Nadu markets. Prices were slightly higher in Kerala market over last week at Rs 91.50 a kg. But as industrial demand waned and there was no perceptible export demand last week, Tamil Nadu prices dropped to Rs 88 a kg.

As the major production season looms large, stocks with the traders are being unwound and the falling trend in prices is expected to become more pronounced in the coming weeks, Mr Prakash B Rao, Member of the Cochin Oil Merchants Association said. Moreover, with clear sunny days prevailing over the coconut growing areas of Tamil Nadu, there is increased conversion of coconuts into copra, which is converted into coconut oil.

Copra to weaken

The emerging price differentials between and Kerala and Tamil Nadu are another precursor of the weakening trend in coconut oil prices, sources in the trade said. Previously, when prices were on the upsurge, Tamil Nadu prices raced ahead of Kerala prices and the differential was maintained the past couple of months. This was the season of shortage in arrivals and Tamil Nadu was the main supplier. The trend is beginning to reverse now, a season when arrivals are poised to strengthen and prices expected to weaken. And Tamil Nadu is expected to take the lead in falling prices.

But price of copra is still to weaken in South Indian markets. Copra prices were ruling at Rs 65 per kg both in Kerala and Tamil Nadu markets. But the demand for edible copra from North India has begun to wane and the prices are expected to weaken as the peak season sets and arrivals perk up, Mr Rao added. The lack of export demand and increased arrivals are expected to weaken copra prices in the weeks ahead.

As the peak production season is just around the corner, the link between coconut oil prices and those of palm oil and palm kernel oil is getting broken. While the price of palm kernel oil had increased to Rs 93 per kg, coconut oil prices have remained relatively steady. The shortage in palm oil is expected to persist in global and Indian markets while the arrivals of coconut oil are expected to increase in the weeks and months ahead. As the arrivals and price of coconut oil drop, the tendency to adulterate coconut oil with the cheaper palm oil is also expected to become less attractive.

Published on January 12, 2011

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