Coconut oil to open weak after lull in market

C J Punnathara Kochi April 13 | Updated on April 13, 2011


After a series of market holidays on account of assembly election, the “ Vishu” festival and a weekend, coconut oil markets are expected to open weak in South India. Prices, which had raced up to Rs 97 a kg despite the onset of the peak production season in Kerala, are most likely to ease in the coming days, Mr Prakash B. Rao, Member of the Cochin Oil Merchants Association (COMA), said.

Although marginally, prices have already begun to ease from the Rs 98-level of the last few days and copra arrivals have also begun to look up. The intense election heat in Tamil Nadu, Kerala and Pondicherry have taken a toll on copra and coconut oil movement, leading shortages, poor availability and increased prices, sources said.

Despite the onset of the peak coconut production season, Kerala continues to lag incoconut oil production and hurdles in coconut oil and copra movement have generated a deficit leading to a spike in coconut oil prices. While bulk of the demand from Tamil Nadu is industrial, for the manufacture of coconut oil-based soaps, shampoos and hair oils, the demand from Kerala is mainly for consumption as an edible oil and remains steady round the year.

There has been hardly any industrial demand for coconut in the recent past.

The peak coconut production is expected to set in over Tamil Nadu and the arrivals are also expected to perk up. Increased arrivals from the two predominant coconut producing States of Kerala and Tamil Nadu is expected to address the present shortfall in arrivals and ensure that the prices ease in the coming days.

Reports also indicate that palm oil and palm kernel oil prices have begun to ease in futures market of Malaysia, the biggest producer globally. Since palm oil and palm kernel oil are direct competitors and substitutes to coconut oil, these price trends are expected to have a salutary effect on coconut oil prices in Kerala. Following the cues from the Kerala markets, coconut oil prices are expected to retrace in Tamil Nadu markets even faster.

Published on April 13, 2011

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