Coconut oil falls below Rs 6k-mark after 25 weeks

The price of coconut oil has dropped below the Rs 6,000 mark to Rs 5,975 a quintal, after a gap of 25 weeks. The price was quoted at Rs 5,925 in the last week of May this year.

The sluggish market is showing more signs of a fall in price. Leading Kochi stockists say Rs 5,500 would be the next supporting level.

It is surprising that the price is shrinking when the off-season in coconut production is at its peak. This decline in prices is mainly attributed to the arrival of low-priced palm oil in local markets. Palm oil is available in plenty at a price tag of Rs 3,400-3,500 a quintal.

Stockists told Business Standard that there is a sudden shift by consumers, especially hoteliers and bakers, towards palm oil and to their estimate, the shift is around 30 per cent. This is a common phenomenon in coconut oil trading, which, to a large extent, depends on the pricing of palm oil. The price of palm oil had fallen from Rs 8,000 to Rs 3,500.

The use of coconuts by Sabarimala pilgrims as the main offering aggravated the crisis.

Tamil Nadu, the largest producer of copra in the country, is also facing shortage due to a host of reasons and this has badly hit the supply in all southern states.

Price of good-quality copra is in the range of Rs 4,000-4,200 a quintal, which, in turn, badly affects the copra crushing industry in Kerala. The sharp increase in power charges had already put the industry in a crisis. Tamil Nadu offers coconut oil at a price of Rs 5,700, but there are complaints over the quality.

Since prices of edible oils are shrinking across the globe, coconut oil alone cannot withstand the crisis. The on-going economic turmoil will make the premium cooking oil to devalue further as the consumption by the cosmetic industry has been reduced sharply in recent weeks. It is also learnt that the drop in the sales of FMCG products, especially cosmetic products, would aggravate the crisis in coconut oil mart further.