Commodities

Sunshine dries up coconut oil gains

C. J. Punnathara Kochi | Updated on June 21, 2011

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With monsoon taking a break and sunshine pervading over the growing regions of Kerala and Tamil Nadu, coconut and coconut oil prices have begun correcting in south Indian markets. While the price fall was more pronounced in Tamil Nadu, prices in Kerala also eased.

The trade expects further fall in prices since big corporate buyers have slashed their procurement prices and were offering rates lower than those prevalent in the market. Supplies of coconut oil are ample as millers, anticipating further fall in prices, released stocks. Earlier, only supplies of raw coconuts were good because farmers were not willing to hold stocks.

Coconut oil prices fell to Rs 95 a kg in Tamil Nadu, while they remained a tad higher at Rs 99 in Kerala, Mr Prakash B. Rao, Member of the Cochin Oil Merchants Association, said. Copra prices also fell from Rs 68 a kg to Rs 65 in the past week.

Apart from consumption demand in Kerala, there was no significant spurt in demand. Even there, sources said, some demand has shifted to competing edible oils, like palm oil and palm kernel oil. Palm oil prices fell to Rs 58 a kg and palm kernel oil fell to Rs 89 a kg.

Global decline

Coming on the heels of an international decline in coconut oil prices, the weak market sentiment is expected to continue. Supplies have gone up in some of the biggest producing countries, such as the Philippines, Indonesia and Malaysia, and prices have eased in global markets. This is also reflected in huge imports and stocks of coconut oil meal India has built up. There has been a major influx of coconut-oil meal, mainly imported from Indonesia and Malaysia, which has depressed domestic prices.

Coconut oil meal prices fell sharply to Rs 15 a kg from Rs 18 a kg in the past week on account of large-scale imports. This has also made domestic coconut oil markets nervous. With big industrial buyers lowering prices and keeping away from the market and global prices falling, traders expect coconutn oil prices to weaken further, unless the weather changes dramatically to curb production.

Published on June 21, 2011

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