Coconut oil price to remain steady as supply improves

Coconut oil market is likely to ease on account of higher supply from Tamil Nadu and declining price of palm oil. Supply of oil from the neighboring state of Tamil Nadu has improved after the state elections helping in easing the market a bit. Lower demand for edible copra from the Northern states has also declined correspondingly, traders said.

Coconut oil prices touched record high of R105 per kg during May and declined to R99 per kg as on Wednesday. Oil from Kangayam, Tamil Nadu delivered at Kochi market was quoted as R97 per kg.

?The pressure has declined a bit with the higher supply. But the season is supposed to end with the rains. This could put more pressure as harvesting and drying is difficult,? Talat Mehamod, member of the Coconut Oil Merchants Association and trader at the terminal market of Kochi, said. Usually price of coconut oil declines with start of production season in Kerala (February) and reaches the end of the trough during June as production peaks in Tamil Nadu and Karnataka.

Paul Francis of KLF Oil Industries feels that the coconut oil market has to do more with the palm kernel oil. ?Higher price for palm kernel oil has pushed industrial users like soap manufacturers to procure coconut oil. It is heard that problems in Ivory Coast has led to higher demand for palm kernel oil as substitute for cocoa butter,? he said. Higher demand for edible copra from the up-country market in the winter also led to lower availability of copra for crushing, he said.

Higher export of coconuts to neighboring countries when the total nut production is lower has compounded the problem.

Coconut oil prices have increased substantially by 60-70 % in six months to cross the R100 per kg level, he added. Prices of substitute oil like palm oil are also coming down which could help the coconut oil market, Talat said.

Prices of substitute oil like palm oil are also coming down which could help the coconut oil market, Talat said. He feels that the market would remain steady and not ease, as supply would be restricted in the off-season. Paul Francis estimates the market pressure to ease due to good supply and does not feel that the market would rally up.