Coconut oil mkt feels heat of rising supply, falling prices

Written by fe Bureau | Kochi | Updated: Nov 13 2012, 09:43am hrs
Coconut-oil market remains under pressure from falling prices of competing oils and goods supply of copra from southern states. Demand continues to remain sluggish with prices of competing oils like palm and palm kernel oil declining due to abundant supply. Meanwhile, supply of copra and nuts from Karnataka and Tamil Nadu remains good due to increased production.

Supply from Karnataka is good. Very soon supply from Andhra Pradesh is likely come. The market is likely to come under pressure due to good supply, Talat Mehamod, member of the Coconut Oil Merchants Association (COMA) and trader at the terminal market of Kochi, said. Kerala is the main coconut-growing state with an area of 10.20 lakh hectare producing 5,911 million nuts, followed by Tamil Nadu (3.20 lakh hectare and 3,716 million nuts), Karnataka (2.87 lakh hectare and 1493 million nuts) and Andhra Pradesh (0.95 lakh hectare and 780 million nuts). These four southern states together account for 90.8 % of the total production in the country.

Demand is poor and after the festival, it is likely to come down further. The coconut oil market is likely to come under pressure and decline. Government procurement of copra has so far not supported the market, said Talat Mehamod. Kerala government recently decided to increase in the quantity of copra procurement. Government sources say 14,000 tonne of copra has been procured and it hopes to procure 28,000 tonne by the year-end.

As on Friday evening, coconut oil prices at the Thrissur market stood at Rs 60 per kg and oil delivered at Thrissur from Kangayam quoting Rs 57-58 per kg. Competing palm oil is quoted Rs 59 per kg while close substitute palm kernel oil is quoted Rs 47 per kg. Palm kernel oil is a substitute of coconut oil and substitution takes place at very thin difference, Talat added.

Malaysian palm oil prices fell 21% as stocks rise in Indonesia and Malaysia, and demand slumps due to the economic problems. Experts estimate Indian edible oil imports to rise more than 4% to 10 million tonne in the 2012-13 (November-October) marketing year as domestic output lags rising demand.