Procurement of copra by state agencies seems to have finally helped in stabilising coconut oil market, as it has remained steady during the peak production season in Kerala.
In Kerala, peak season for coconut harvest starts in January and extends up to June and prices usually drop during this time. Supply from Tamil Nadu and Karnataka start arriving in the markets from March, which further pushes oil prices.
In the terminal market of Cochin, coconut oil was quoted Rs 49 per kg on Thursday. In October, oil prices had eased down to Rs 42 per kg because of good supplies from Tamil Nadu.
Wholesale prices of coconut oil prices had touched a high of Rs 65 per kg at the terminal markets of Cochin in August 2008. Coconut oil prices started their downward slide as palm oil rates, which are used as a substitute for coconut oil dropped in the global markets, increasing their imports in the local markets.
Sources at Kerafed?the agency responsible for procurement told FE that procurement was on the right track and would succeed eventually.
“We have procured almost 23,000 tonne of copra and coconut. In 2009 we procured 20,000 tonne and during the first two months of 2010 we procured 3,000 tonne. And we believe that the efforts are finally showing,” Febi Varghese, managing director of Kerafed told FE.
Kerafed procures copra only from genuine farmers and not traders.
Traders who had stocked copra had to sell and this depressed the market in the early days, he added. The support price offered by government agencies (of Rs 44.50 for a kg of copra) is equivalent to the oil price of Rs 67-68.
Availability of copra in the market is lower than the usual level, Paul Francis of KLF oil Industries told FE, adding that labour shortage in the state of Kerala is also helping in keeping prices firm. Talat Mehamod, a trader at the terminal market of Kochi said Fast moving consumer goods (FMCG) companies like Marico are also procuring copra adding to the tightness.