Coconut oil prices are likely to firm up in the short run and may remain steady in the medium term due to supply-demand mismatch of coconuts, says a study by the Agricultural Market Intelligence Centre (AMIC) of Kerala Agricultural University (KAU).
The study reports that the growing demand for edible oil, lower production of nuts and a weaker rupee would act as push factor for the prices to firm up, while a good crop of oil seeds in India and economic recession in some parts of the world would act as a pull factor.
?Coconut oil exports from Philippines is lower in 2011 due to short supply. It is attributed to fatigue after three years of successive good production, which stressed the coconut trees,? K Satheesh Babu of AMIC said. Barring Indonesia, coconut production in most nations is lower, resulting in global demand-supply mismatches, he said.
In India, the area under coconut cultivation has been drastically declining in Kerala, the major coconut producing state, he added. ?A host of factors like unsteady price for nuts, high wage rates coupled with shortage of labour, high incidence of diseases and pests, declining crop productivity, and relatively lower price when compared to other crops has led to decline in coconut production,? K Satheesh Babu said.
AMIC reports that the increasing per capita demand for edible oils in face of higher purchasing power is a major push factor. Tamil Nadu is major supplier of nuts and coconut oil to the Indian market. ?The corporate buyers have been keeping away from the market. Increased demand for cosmetics would force them to buy more,? Babu said.