Rising copra and coconut oil prices cheer up industry
A sudden spurt in the prices of coconut oil and copra since the beginning of September has brought smiles to the faces of farmers and traders.
Copra prices rose by ₹20 per kg and reached ̥122 in the Kerala market. Coconut oil saw a bigger jump of around ₹27 when it touched ₹186. Prices in Tamil Nadu were ₹176.50 and ₹130 respectively, said Thalath Mahmood, President of the Cochin Oil Merchants Association (COMA).
The rising trend in prices is expected to intensify once the festival demand begins in North India, he said adding that the raw coconut prices too have started to strengthen reaching ₹62 per kg from ₹36 a fortnight ago.
Informed sources in the sector said the recent increased demand for tender coconuts and the drought-like conditions in Karnataka have reduced production and impacted copra supply, thus supporting the rate hikes.
Ubais Ali of Mezhukkattil Mills cited supply constraints for all commodities globally and the industry’s concern over the proposed European Union Deforestation Regulations (EUDR) on crude palm oil and palm kernel oil, widely used for making toiletry products, as the reasons for the sudden surge in prices.
Support from supply side weakness
He pointed out that lauric acid, a derivative of palm oil and palm kernel oil, is the base for making toiletry products such as hand wash, body wash etc. Any supply-side weakness of these commodities may benefit coconut oil, an alternative for the industry, leading to its increased stockpiling, he added.
The ball copra prices which have reached ₹235 thanks to festival demand, are expected to rise further. Its price was in the range of ₹100-120, forcing farmers in Karnataka to convert it to milling copra to fetch better prices, Ubais Ali said.
According to KK Devraj, a consultant in the coconut oil industry, the impact of the price increase of sunflower oil, soya oil and palmolein due to the rise in import duties was felt in the coconut oil market as well. The shortage of copra, especially in Tamil Nadu – which is now the main supplier – has made it dear in the market, despite low demand from the big buyers and the industrial sector. The anticipated festival season and Diwali demand for edible copra, although not on a large scale as in the past, may lead to further escalation in prices, he said.
While coconut farmers are getting a better price for the coconuts and copra, the retail consumers have started feeling the impact on their family budgets, as all edible oil retail prices have started going up, he added.