| Coconut oil prices have plummeted owing to an increase in supply in most southern states. The per quintal price of coconut oil has dropped to Rs 4,750 from Rs 4,950 recorded on November 11.
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| The southern states have ample copra and coconut oil stocks owing to a bumper crop in Tamil Nadu and Karnataka last season. Given the high stocks, the market is facing heavy selling pressure and is heading for a crisis, unless there there is a market intervention.
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| Traders told Business Standard that there is a possibility of another steep fall in prices of both coconut oil and copra as main production season in Kerala would be in full swing by next month, which will add more fresh stocks to the existing stockpile.
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| Traders projected a price band for coconut oil between Rs 3,900 and 4,000 a quintal next season. Prices in futures trading also indicate this, with the price for March contract having dropped below Rs 4,000 already.
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| Copra production season in Kerala will be active by next month and supply to terminal markets has started already from Malabar region though in lower quantity.
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| In Kerala, coconut production is on the peak level during January - February and copra production will go on till the end of May. Traders said that supply from other states, especially from Tamil Nadu would be active for next few months also.
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| And there will be a supply glut in the market, which is likely to cause a steep fall in prices in the coming months.
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| Meanwhile increase in import of copra cake has also affected the market and most of industrial users of coconut oil are importing copra cake and extracting oil from it, as unadultrated coconut oil is hard to find. Traders said that 20 - 25 per cent oil can be extracted from copra, which is very cost effective for the industry as global prices are rather very low.
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| Low prices of other edible oils like palmolein is also keeping coconut oil price down.
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| Meanwhile, a high-level meeting of government officials, Coconut Development Board (CDB) and Kerafed and trade representatives, had decided to submit its suggestions to the government in order to arrest the fall in prices.
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| Cochin Oil Merchants Association (Coma) had pointed out that value-added tax (VAT) on coconut oil, now at the rate of 4 per cent should be pared to 1 per cent.
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| The meeting also decided to initiate action for market intervention operation as the falling price demands so. Kerafed is procuring very small quantities of coconut and copra. |
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