High demand to keep coconut oil at a high

Coconut production slips due to low Kerala output

Coconut production slipped in the country this season with a low output in the main producing region of Kerala. However , the crop in Tamil Nadu, the next biggest producer, has been good, which helped to meet the demand. The coconut crop in Kerala is expected to be lower by 20% to 30%. With good rains, the coming season which begins after the monsoon may see a bumper harvest, say farmers. The total coconut production is around 1,570 crore nuts. Kerala accounts for 37% of this followed by Tamil Nadu at 34%.

Demand good in both north India and abroad

Upcountry as well as export demand have been strong. This has lifted the prices to high levels. North Indian agencies have been buying from Tamil Nadu to meet their requirement . With a ban on exports from Sri Lanka, Indian coconuts have found favour in Gulf countries. As a result, the export of fresh and dry coconuts rose sharply in the last year. This added to the shortage in the domestic market.

Coconut oil prices rise on low production

The retail prices of coconut oil crossed Rs 100 per kg as early as January, prompting coconut oil bottlers to raise the prices of their products. But with the start of the harvest, the prices dropped a tad only to pick up later as the output dwindled. In May, the wholesale prices touched Rs 104 per kg. The prices have been hovering in the range of Rs 95-100 per kg this month.

Demand not hit as other oils turn costlier

The increase in prices has not affected the demand much because other edible oils have also become costlier. Usually , a sharp rise in coconut oil price leads to an adulteration with other oils. However, the price of palm kernel oil, which is used to adulterate coconut oil, has also been rising and there is not much difference in the prices of the two oils now.

Prices to rise if demand stays stronger

It is a lean season for coconuts now. This phase will continue till August when the Onam demand in Kerala begins. This will be followed by Ramzan and Diwali demand from north India apart from exports. Traders rule out the chances of prices coming down. They say there is a strong chance of prices – now around Rs 100 per kg -- climbing up by Rs 20 per kg provided the demand remains strong.