Coconut oil prices have risen in the last few weeks because of low copra supply from Tamil Nadu and Kerala due to rains. Prices have also firmed up because of increase in substitute palm kernel oil prices. Traders said prices might firm up more in the coming few days as supplies are steadily shrinking.
Onset of monsoon in southern states has lowered conversion of coconut into copra. Rains hamper plucking and collection of coconut while conversion into good quality copra is nearly impossible without dryers.
In the terminal market of Kochi spot markets rates have increased by almost 5% in the last two weeks to touch Rs 52.50 per kg.
Coconut delivery in Kochi from Kangayam in Tamil Nadu was quoted at Rs 53.50 per kg on Thursday.
?Coconut oil prices in Tamil Nadu have moved up due to variety of reasons including the rains,? Talat Mehamod, a Kochi-based trader said.
In the futures market at the First Commodities Exchange of India Limited, the prices for July delivery futures are firmed up at Rs 53.15 per kg and Rs 53.55 for August delivery.
Copra is also seen steady at Rs 34.74 per kg for July delivery and Rs 35 for August delivery signaling short supply in the near-term.
Traders are expecting coconut oil and copra prices to ease due to the release of stocks by the Nafed and state agencies.
Meanwhile, Mehmood said prices have been aided by the hike in price and availability of palm kernel oil.
?Price of palm kernel oil, which is a very close substitute of coconut oil has increased substantially in the recent past. This has helped in cutting down adulteration of coconut oil with palm kernel oil,? he said.
Palm kernel oil was selling at Rs 50 per kg in Kerala, while palm oil is cheaper at around Rs 44 per kg. Palm oil is extracted from the pulp of oil palm fruit while palm kernel oil is derived from the kernel (seed) of oil palm.
Palm kernel oil and coconut oil are highly saturated than palm oil. Palm kernel oil is widely used in adulteration of coconut oil and is often used as a substitute in industrial use.