With the festival of ?Onam? round the corner, coconut oil prices are likely to increase by 15-20% in the short term. The demand for coconut oil increases by 30-40% during the festival season, traders said. With the price of the substitute palm oil ruling higher than coconut oil, the demand is likely to take the price to higher levels, traders said.
The rains have also helped in stabilising the price of coconut oil. Heavy monsoon rains in the southern states have led to a shortage in the supply of good quality copra. Interestingly, it is the peak season for coconut in the neighbouring states of Tamil Nadu, Karnataka, and Andhra Pradesh. The state government?s decision on removing tax on coconut oil and copra has also helped the market stay firmer.
Prices have already touched Rs 49 per kg in the terminal market of Kochi due to scarcity of copra, Talat Mehamod, a trader at the Kochi market told FE. Palm oil is retailing above Rs 50 per kg and given the supply constraints, the price of coconut oil could breach the Re 50-per kg mark very shortly, he said. Almost 75% of the consumption of coconut oil takes place in Kerala whereas most other states depend on the cheaper palm oil and other oils for cooking. The import of cheaper palm oil brought to the nation under the advance licence scheme is often a major cause of depressing the price of coconut oil during festival season. As there is no time frame for re-export, the oil floats in the domestic market affecting the coconut oil prices.
The Coconut Development Board has requested the Union government to refrain from importing palm oil during festival season to give the farmers a fair return.