The market is expected to firm up in the near-term due to lower supply. It is reported that some societies are procuring copra in Tamil Nadu. It has lowered the arrival pressure from that state, Talat Mehamod, president of the Coconut Oil Merchants Association (Coma) and trader at the terminal market of Kochi, said.
He feels that the market would firm up in the short-term due to lower availability of copra in the open market. Traders are stocking copra as they feel that the market would rally when the government agencies step in and corporate buyers are also active in a limited way, he added.
Interestingly there are reports that labour shortage is also affecting copra drying process in Tamil Nadu. It is also putting pressure on the price, Talat Mehamod said. Increasing supply from the southern states of Tamil Nadu, Karnataka and Andhra Pradesh due to productivity gains has been a major reason for the weakness in the coconut oil market. These states do not consume coconut oil, which is a major factor in determining the price of coconut. It is reported that 70 % of the oil is consumed in Kerala by the households.
Officials of the Agricultural Market Intelligence Centre (AMIC) of Kerala Agricultural University do nut concur with the view that the coconut oil market would form up in the near-term. Tamil Nadu gets most of the rains from the North east Monsoon towards the later part of the year. So the question of supply disruption is not possible, K Satheesh Babu of Kerala Agricultural University (KAU) said. He expects the market to trade weak without government procurement.
Production is back to normal and higher by 15-20% when compared to the previous season, he added.