Commodities

Coconut oil surges as copra arrivals shrink

C. J. Punnathara Kochi | Updated on February 01, 2011 Published on February 01, 2011

A worker drying coconut for making copra near Kochi in Kerala (file photo). - K K Mustafah

Coconut oil prices surged as supplies of copra waned in the market and palm kernel oil prices jumped to record levels. Coconut oil prices were ruling at Rs 93.50 a kg in the Kerala market and at Rs 92 a kg in Tamil Nadu. The price trend is likely to be sustained or expected to firm up further, sources in the market said.

Palm kernel oil prices were hovering at an unprecedented Rs 110 a kg. The huge demand for palm kernel oil from the biscuit and paint industries is still to reflect on coconut oil.

Coconut oil is considered the most optimum industrial substitute for palm kernel oil, but the demand would be so huge that the country's coconut oil market will not be able to meet the demand, the sources added.

Copra arrivals

The longer the peak coconut production season and copra arrivals are delayed, the longer the firm price trend is likely to be sustained.

There is virtually no copra arrivals into the market, Mr Prakash B. Rao, Director of Cochin Oil Merchants Association (COMA), said. Copra stock with NAFED is getting fast depleted and the market intervention role is likely to be limited.

Although demand has been muted given the high prices, some enquiries from North India, especially Delhi, are evident in the market.

As prices have soared there is some amount of speculative activity too. The price of solvent refined coconut oil, which is used by the industry and which was lower than milled coconut oil, has caught up and is quoting at Rs 92 a kg.

The soap, coconut hair-oil and shampoo manufacturers who have been keeping away from the market due to the high prices might be forced back into the market in the coming weeks.

If the peak coconut production season is delayed much further, nobody would be the gainer, sources in the trade said. When the price rises, it would only be the final consumer who would have to pay a higher price, trade sources warned.

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Published on February 01, 2011
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