Coconut oil prices skid on weak demand

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Kochi: Coconut oil prices are dipping and are likely to ease further as supply remains unabated and demand weak. With prices of substitute palm oil coming down further in the global market, the demand for coconut oil was slated to decrease further, traders said.

State-run Coconut Board has been claiming that dumping of cheap palm oil from Malaysia is hurting the market. Coconut oil prices have fallen by almost 10-12 % after the government started procurement of copra and raw coconut. Prices at the terminal market of Kochi came down to almost Rs 44 per kg last week.

Interestingly, the coconut oil market has eased by almost 30% from the high achieved last year .

Global shortage of edible oils had propelled prices of palm oil above coconut oil prompting a shift by household and hotel industry.

Coconut oil industry had gained from the relative price difference as upcountry industries like soap, detergent and confectionery shifted to the cheaper oil. Coconut oil had gained by 30-40% in a single year and managed to remain stable even in the peak production season of February-July of 2008.

However, the recession and the consequent drop of crude oil have brought down the demand for palm oil. Overproduction of palm oil in

Indonesia and Malaysia has brought down its price and India, the second largest edible oil market in the world after China, has become an easy dumping place, as there is no import duty on this product.

Industrial users had slowly shifted to coconut oil when the difference between imported palm oil and coconut oil increased to more than Rs 10 per kg.

A study by the Coconut Development Board (CDB) states that households shift back to palm oil when coconut oil sells above a premium of Rs 10 per kg. Coconut oil is at present consumed only in south Indian states, and that too mostly in Kerala. In other states, the oil is used mostly as hair oil.