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.

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.

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.

New Ipad Application :Business Standard's all new IPad App Click here to download for free Other Stories      - S&P reaches 7-month high before hitting wall - World Bank President Zoellick to step down on June 30 - Oil cos cut jet fuel prices by Rs 350/kl - Telcos operating profit to rise 5% in 2 yrs: Crisil - PESB recommends SS Narsing Rao for CIL's top slot

Read Business news in  Advertisements -  Now property search gets more exciting than ever before! -  High Growth Business Opportunities in Africa - Register to explore -  We live for our family. have you secured them? -  Earn fuel worth Rs.2400 with Citi -  India's No. 1 Property Site. Click here to know more.. -  Get 5% cashback on telephone bills with Citi -  Diseases earlier, Saving Costs, Extending Lives. Know More.. -  Enjoy the journey as much as the destination. click to know more.. -  Exim Bank Conclave on India - Africa Project Partnership. Know more.. -  Medium-sized businesses are the engines of a smarter planet. -  Be part of it The World's Largest Aircraft. -  Creating Wealth made simple the SIP way. Know more.. -  Only Developer to give a guarantee on time space & rate. -  Office 365 for professionals and small businesses. -  Buy Your Property with Our Triple Guarantee in India. -  Improve Patient Care & Experience. Click here to know more -  Win a Business Class Ticket to Europe..Know more.. -   Introduce a New Automotive Luxury Car.. know more -  Health is Wealth..... Insurance + Savings... Know More...