Coconut oil prices are likely to rally further to record levels with supply of copra falling short, traders said. Oil prices are already on the higher side by almost 22% from the price recorded in January 2008 and traders see the market breaching the recent best of Rs 7,500 per quintal very soon.
Conversion into copra has almost stopped in Kerala due to rains and supply from Tamil Nadu is low, Talat Mehamod, a trader at the terminal market of Kochi told FE. “Farmers in Tamil Nadu are holding back some stocks in anticipation of better realisation, but the allover availability of copra has declined,” he added. 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.
While the Coconut Development Board harps on the consumption of tender coconut as the main reason for the declining availability of copra, traders point out that value addition has helped a lot. “Big North Indian companies are procuring coconut for conversion into coconut milk and desiccated coconut. The market for packed coconut milk is seen increasing rapidly,” Talat added. With other edible oils also on the boil, traders see scope for more substitution by the industrial users like soaps and detergent manufacturers.
Increasing price of palm oil in the global market also wards off competition by household consumers who switch usage depending on cost, board sources said, believing that inelastic demand for tender coconut due to its health benefits will help stabilise the coconut oil market.
Source: Financial Express
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