Coconut oil is in a bearish phase due to good arrivals from all the southern states. Procurement efforts by the state agencies have been nil so far and is adding to the sentiments. Traders and academic experts feel coconut production would be higher by 15-12% compared with the previous season and expect the market to decline further by 10-15% from the current level.
As on Monday evening, coconut oil at the terminal market of Kochi stood at R6,050 for a quintal, while Kangayam oil delivered at Kochi stood at R5,800 per quintal.
In 2010-11, coconut production was estimated to be lower by 10-15% due to erratic climate, according to a study by the Agricultural Market Intelligence Centre (AMIC) of Kerala Agricultural University. Trade estimates had put coconut production in the last season to be lower by 50% in Kerala. It triggered an upward price cycle in the coconut sector and coconut oil prices touched record high of R105 per kg during May 2011.
?Production is back to normal and higher by 15-20% compared with previous season. The market is likely to decline further unless the government puts in some effort to counter it,? K Satheesh Babu of Kerala Agricultural University (KAU) said. Production season in Kerala starts in February while in Tamil Nadu and Karnataka starts later in March and April. Usually, price of coconut oil declines with start of production season in Kerala (February) and reaches the end of the trough during June as production peaks in Tamil Nadu and Karnataka.
?Consumption is good but not enough to support the market as the arrivals are very good. It seems the production of nuts in all the states is extremely good this year,? Talat Mehamod, the president of the Coconut Oil Merchants? Association (COMA) and trader at the terminal market at Kochi, said. He feels the market would go lower to the level of R5,500-5,600 in near term without government intervention. Coconut oil is currently the cheapest in the market with close substitutes like palm oil retailing at R65 per kg and palm kernel oil retailing at R76 per kg in the Kochi market.
Dorab E Mistry, a veteran oil industry expert, estimates coconut oil price to trade lower due to improvement of coconut supply from Philippines and the price of palm kernel oil to trade higher in the current oil season.
