The coconut oil market is likely to ease with demand declining after the Onam festival and arrivals picking up from other states, traders said. Traders fear that cheap subsidised PDS palm oil from other states is likely to be smuggled into Kerala and depress coconut oil prices to lower levels.
MJ Kuriakose, president, Cochin Oil Merchants Association (COMA), feared a sharp drop in coconut oil prices as consumers shift to the cheaper alternative.”The retail price of palm oil has dropped to Rs 45-Rs 47 per kg, while coconut oil retails at Rs 65 per kg. Any further drop in the price of palm oil may prompt a larger substitution effect,” he said. With the government ready to subsidise palm oil by Rs 15 per kg, the retail price of palm oil is likely to come down to Rs 30 per kg.
Kuriakose feared that the huge difference between the two oils could encourage illegal trade in Kerala. “Currently, people smuggle PDS rice from Tamil Nadu due to the huge difference in price. We fear a flooding of cheaper palm oil in the state which would further depress the market,? he added.