Coconut oil prices are likely to fall with demand dropping after the Onam festival, traders said. Demand at the terminal market of Kochi drops down by 50% post-Onam and prices are likely to fall by 20-30%.
?Currently, the demand for the commodity is on the higher side with the volume of trade double the normal level,? Cochin Oil Merchants Association (COMA) president MJ Kuriakose told FE.
The price has breached the Rs 50 per kg mark and the availability of the product is on the lower side, he said.
Traders estimate the market to give in to the selling pressure from Tamil Nadu after the festival period. Tamil Nadu produces a large volume of the oil but consumes very little, Talat Mehamod, a trader, said.
Almost 75% of the consumption of coconut oil takes place in Kerala whereas most other states depend on cheaper palm oil and other oils for cooking. Coconut oil prices have been at the receiving end for some years with production of coconut increasing in the states of Tamil Nadu and Karnataka.
Traders are pinning their hopes on tax concessions given by the state government to regain industrial users. The toiletry sector, especially the bathing soap manufacturers, had been using coconut oil for around 23% of their total oil requirements until recent years but currently the offtake is around 5%.
?The new concessions on a truckload of copra or coconut oil work out to Rs 20,000 and the new margin can help in competing with other oils,?Kuriakose said.