A sharp increase in the supply of copra and coconut oil has hit the price of the commodity during the last 3-4 weeks. The price of coconut oil has dropped by Rs 400 a quintal to Rs 4,800 a quintal on Wednesday.
The depreciating trend in prices is likely to continue for the next couple of weeks and may further fall to Rs 4,500-4,600 a quintal. The picture will be different once the monsoon arrives across the southern states, as copra processing gets affected in the rainy season.
The import of coconut oil from Tamil Nadu, the largest producing state, to Kerala is on an increase as the price in Tamil Nadu is Rs 4,400 a quintal. The traders there are ready to deliver coconut oil in Kerala at a price tag of Rs 4,550 a quintal. Along with Tamil Nadu, production is also active in Karnataka and Andhra Pradesh creating an abundance in supply.
During January, coconut oil price was in the range of Rs 5,800-6,000 a quintal. The extreme heat of the ongoing summer season has increased the copra production in Kerala. The season will continue till the end of June, therefore a supply crunch is not expected till then.
The low price of palm oil is also a threat to coconut oil market, though the gap has narrowed in recent times. The wholesale price of palm oil is Rs 4,200-4,300 a quintal and moreover, its demand is high. It is reported that the palm oil price might increase as production is badly hit in east Asian countries.
The drop in price of coconut oil may favour a rise in its demand. Traders said the upcountry demand for coconut oil has increased in the last couple of weeks.
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Meanwhile, copra procurement operation in Kerala is yet to gain momentum as co-operative societies are not active in procuring copra. Procurement has picked up only in some districts of the state.
The state government is also not keen on procuring copra since it is a loss-making exercise for the primary co-operative societies and has evoked large scale corruption in the past.