Coconut oil on boil as Onam spurs sale

Written by Rajesh Ravi | Kochi | Updated: Jul 28 2010, 14:25pm hrs
Low arrival of copra in the market and festival demand have pushed up coconut oil prices. Traders said prices have risen by 5-6 % in the past few days and look likely to rally further by 10% on the back increased demand for 'Onam'.

Spot prices at the terminal market of Kochi touched Rs 54 per kg on Tuesday on strong demand.

Farmers are also holding back supplies to meet the demand during festivals, which has further accentuated the scarcity, Paul Francis of KLF oil Industries said.

Copra arrival is short and the market is firm. It is likely to move up by 10% on Onam demand. Industrial users are also procuring good volumes, Talat Mehamod, a trader at the terminal market of Kochi said.

Demand for coconut oil or substitute edible oils usually rise by 20-30% during festivals as households consume more oil for preparing snacks and other food items. Rains in coconut producing regions of Kerala and Tamil Nadu decrease the availability of copra and its subsequent conversion into oil.

The onset of monsoon in southern states has lowered the conversion of coconut into copra. Rains hamper plucking and collection of coconut while conversion into good quality copra is nearly impossible without dryers.

Traders said supply of copra from northern Kerala is limited and may remain weak till the end of Ramadan fasting. Trading volumes in major copra trading centres of Malapurram. Badagara and Tellicherry usually drop during Muslim festival season.

Talat said increased price of substitute palm oil and palm kernel oil might have helped in steadying coconut oil markets. Palm kernel oil is a very close substitute for coconut oil. It is also used in adulterating coconut oil when the price difference is huge, he added.

However, Paul Francis feels that supplies will improve in the coming days because farmers will liquidate their stocks for immediate cash ahead of the festivals.

Some copra is held back for immediate cash need and sold just before festival for buying other things. This helps in good or higher supply during the festival season, he said.