Coconut oil prices continue to remain steady due to limited arrivals of copra and oil in the market, say traders. The market is likely to remain range-bound in the near term and move up after May with the advent of the monsoon. Traders feel that procurement of copra by state agencies would have helped in better returns for farmers. Surplus palm oil production in Malaysia and Indonesia has severely affected the price of coconut oil in the global market.
?Arrivals of copra are limited when compared to the normal level. Reports of lower production of nuts are coming in from North Kerala. Drought-like conditions in the state must be a major reason for the lower yield,? Talat Mehamod, member of the Coconut Oil Merchants Association (COMA) and trader at the terminal market of Kochi, said. Usually, the price of coconut oil declines with the start of the production season in Kerala (February) and reaches the end of the trough during June as production peaks in Tamil Nadu and Karnataka. The rising consumption of tender coconut seems to have helped in supporting its price even during the season of high production.
Coconut oil prices were quoted R63 per kg on Tuesday evening, with Kangayam oil delivered in Kochi quoting R62.50 per kg. Competing palm oil was quoted at R58 per kg while close substitute palm kernel oil was quoted at R56 per kg. Palm kernel oil is a very close substitute to coconut oil and substitution takes place at a very thin difference.
Talat feels the government is not sincere in helping coconut farmers. ?If procurement was done in the correct manner, the market would have firmed up given the lower-than-normal supply. Farmers are not getting good returns for coconut,? he added. Reports of the Tamil Nadu government switching to coconut oil from palm oil for PDS may provide some support to the market. Coconut and coconut oil exports from India are seen increasing slowly despite good competition from neighbouring Sri Lanka. The Coconut Board is trying to encourage more oil exports by bringing in new players.