Coconut oil mkt set to ease on increase in supply

Written by Commodities Bureau | Kochi | Updated: Jan 24 2009, 04:47am hrs
The coconut oil market is likely to ease further as supply increased in Kerala with the resumption of peak production season, traders said. Coupled with the decreased offtake of oil by industrial users from other parts of the country, prices are likely to come under more pressure in the coming days, Talat Mehamod, a trader at the Kochi terminal market told FE. Supply of copra has also shown an increase as stocks from the auction held in Sabarimala come into the market. Pilgrims to the hill shrine of Sabarimala take 4-5 coconuts per person as offerings to the deity, and annually more than one crore people visit the temple during October-January.

From a high of Rs 65 per kg, coconut oil prices are down to Rs 56.50 per kg at the Kochi terminal market (as on January 22). The decrease in the price of palm oil has been a critical factor in the ease seen in the coconut oil the market, Talat said. Palm oil currently retails at Rs 32-34 per kg in the Kochi market.

Futures prices, in the only exchange that trades in coconut oil, reflect the sentiments and the March delivery is quoted at Rs 51.20 per kg, while the May delivery has been quoted at Rs 49 per kg. Cheaper options could make more consumers shift to palm oil and further depress the demand for coconut oil, Talat explained. Any further drop in palm oil prices could see the hotel and bakery sector using the commodity, he emphasised.

While production is in full swing in Tamil Nadu, nuts from Kerala will enter the market from February. In some coastal places like Ponanai in Malapurram, supply has been growing steadily, Talat said.