A heavy selling pressure by stockists and farmers of Kerala coupled with a glut in the market has made coconut oil and copra markets grim in the last 2-3 weeks. The coconut oil market quoted Rs 4,675 a quintal on Tuesday which was Rs 4,800 on June 1. There has been a sudden drop in the prices in the current week as the market quoted Rs 4,750 last Wednesday.
Leading Kochi and Thrissur-based dealers told Business Standard that the slow pace in procurement of copra by Nafed has caused a sudden unleashing of stocks to open market. The Union government earlier announced that copra would be collected at a much higher floor price of Rs 4,450 a quintal. The open market price of copra now varies in a range of Rs 3,140-3,175. A large number of stockists and growers had stocked copra anticipating procurement by Nafed. But the procurement operations have not picked up yet and the stringent quality norms and confining of copra collection only from genuine farmers has terribly upset the market.
Kerafed, the nodal agency for procurement operations in Kerala is not active due to various reasons including the higher floor price. This, in fact, resulted in sudden increase in the supply of copra in all the south Indian states especially in Kerala and Tamil Nadu.
Production of copra and coconut oil is active in Tamil Nadu, Andhra Pradesh and Karnataka and there has been an increase in supply during the last couple of weeks. Monsoon had partially affected processing of copra in Kerala, but coconut production is high now. Tamil Nadu is active throughout the year in production of coconut oil irrespective of season or off season. Tamil Nadu offers coconut oil at a price tag of Rs 4,200 a quintal and is supplied in major markets of Kerala.
The production season will be fully active in Tamil Nadu by next month and market sources expect a much stronger supply by then. So the price is likely to cave in by Rs 200 a quintal within a short period.
Abundant supply of palm oil also raises serious threat to coconut oil. Palm oil is available in large quantities at a price tag of Rs 4,400-4,500 a quintal. Bulk users like hoteliers and bakers prefer palm oil to coconut oil since price is lower by Rs 200 a quintal on an average. This also brings in grim prospect for coconut oil and copra market in the near future.