Dropping raw coconut prices seen as short-term correction

Raw coconut prices are now moving south with wholesale rates dropping to ₹34/kg after climbing to a record ₹38/kg in the past few months.

But market sources termed this a short-term correction which is likely to continue up to March.

The year 2019 could be a lean season, with the impact of Cyclone Gaja and the two consecutive droughts in Tamil Nadu and Karnataka expected on production.

The production during the 2016-17 agriculture year was 24 billion nuts and the third estimates released recently by the Coconut Development Board for 2017-18 ending June put the figures at 23.5 billion nuts. The sector is not expecting any marginal increase in the 2018-19 agriculture year with figures likely to be more or less the same as the previous season.

Though last year’s floods in Kerala had destroyed other major crops, coconut production remained unaffected in the major growing areas.

Kalai Selvan, Chairman, Coconut Producer Company, Thanjavur, told BusinessLine that Cyclone Gaja had severely affected Pattukkottai, the main production centre in Thanjavur with an area of around 40,000 hectares. The yield had declined in the entire area due to uprooting of trees and production had come down to as low as 100 nuts/acre compared to 1,600 nuts/acre earlier.

Yet, there was no improvement in prices due to the non-availability of mature nuts. Farmers are now on a re-plantation drive and the new harvest is expected only after eight years, he said.

According to Vinod Kumar, CEO, Palakkad Coconut Producer Company, the raw nut price was unusually on the higher side and this has affected demand. A further price correction is expected due to this declining trend. “We are not expecting a good yield in 2019 as the severe monsoon last year affected pollination in coconut palm,” he said.

The declining trend in raw nuts is also reflecting in the copra market with prices coming down to ₹116/kg in Kerala and ₹106/kg in Tamil Nadu.

Coconut oil prices are hovering at ₹160/kg in Kerala and ₹150/kg in Tamil Nadu. Thalath Mahmood, president, Cochin Oil Merchants Association (COMA), attributed the price drop to subdued corporate offftake and poor local demand.

The higher prices of raw nuts have also affected value- added coconut exports during the last two years due to the difference in international prices in competing countries such as the Philippines and Indonesia.

The Centre had hiked the MSP of copra up by ₹2,170/qunital to ₹9,920 for the 2018-19 agriculture year from ₹7,750 in the last year. The support price of milling copra has been raised by ₹2,010 to ₹9,521 from ₹7,511. However, it has been suggested that the higher MSP would impact the global competitiveness of domestic coconut prices vis-a-vis global price, which is very low at present.

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