Coconut oil prices fall on supply of palm and palm kernel oil

Written by RajeshRavi | Kochi | Updated: Sep 29 2012, 07:30am hrs
Coconut oil market is likely to come under more pressure due to good supply of competing edible oils like palm and palm kernel oil. Edible oil experts estimate palm oil prices to decline in the coming season and increased imports to India. Lauric oil complex, which consists of coconut oil and palm kernel oil, are also under pressure globally due to the recovery of production in Philippines and Indonesia.

In the domestic market, coconut oil prices have declined after the festival season and currently quotes around R57-59 per kg. Good supply of copra and coconut oil from Tamil Nadu is putting pressure on the market. Demand is sluggish with palm oil retailing at R60 per kg and palm kernel oil selling at R54 per kg in the Kochi market. Industrial users shift to coconut oil when the relative price difference between coconut oil and other oils come down. Coconut oil is consumed mostly in Kerala and certain parts of southern Karnataka and Goa.

Dorab E Mistry, a veteran oil industry expert estimates both palm and coconut oil market to come under pressure in the coming oil year due to good supply. Coconut oil production in Philippines and in Indonesia has recovered very well. Production of palm kernel oil is also recovering very well. At origin, both these oils are trading below the price of palm oil. I believe the over-supply of lauric oils will continue for several more months, Dorab said at an edible oil conference in Mumbai last week.

Dorab estimates the Indian palm oil imports for 2011-12 to be about 10 million tonne. India is also likely to end this current oil year with higher stocks than the previous year. As I said earlier, a massive palm oil push is currently underway to boost shipments to India. This is the best destination for these palm oil shipments and therefore stocks in India as at the end of October as well as pipelines will be higher than previous years, he added.

State-run Coconut Board has stated that higher imports of competing edible oils like palm oil and palm kernel oil is depressing the coconut oil market. The board has requested the Union Commerce ministry to hike the import duty of crude palm oil to 10% from nil and appropriate increase in the import duty of refined palm oil from the existing 7.5%.