Seasonal variations in demand and decrease in the price of substitute palm oil is likely to ease the price of coconut oil, traders said. After several months, the price of RBD palm oil has come down and is trading below the price of coconut oil. In the terminal market of Kochi (on Thursday), coconut oil traded at Rs 64 per kg, while RBD palm oil was quoted at Rs 60.50 per kg.
The global shortage of edible oils had propelled the price of palm oil above coconut oil, prompting a shift by households and the hotel industry. The coconut oil industry had gained from the relative price difference as industries like soap, detergent and confectionery shifted to the cheaper oil. Coconut oil gained by 30%-40% in a single year and managed to remain stable even in the peak production season of February-July.
?Demand drops in the rainy season, while supply from Tamil Nadu is showing signs of improving. The market is likely to ease or remain flat for the short term,? Talat Mehamod, a trader at the terminal market of Kochi told FE. Any further drop in palm oil prices could see the hotel and bakery sector using it, he added. While the supply of oil has shown some increase, the supply of copra has remained low, Talat said. Traders feel that farmers in Tamil Nadu may be holding copra, considering the rally in coconut oil. However, a section of traders feel that the price of coconut oil is likely to remain stable given the fact that the conversion into copra has been observed to decrease in many parts of the nation. The global situation is also favourable to coconut farmers with supply shrinking due to lower production in Thailand and Sri Lanka.