Copra, coconut oil prices rising despite supply glut

Although south Indian markets, particularly Tamil Nadu, are flooded with copra and coconut oil, prices are increasing almost on a daily basis, defying the usual demand and supply situation.

Kochi-based coconut oil traders alleged that the spot prices are being increased artificially through planned operations in the futures market.

Prices of coconut oil have appreciated by Rs 400 a quintal during the last three weeks; the city market was quoting coconut oil at Rs 4,950 a quintal on Tuesday. Copra prices rose to Rs 3,185-3225 a quintal. In Tamil Nadu, coconut oil is selling in the Rs 4,500-4,600 range.

Owing to rise in supply of both coconut oil and copra from Tamil Nadu, prices of coconut oil had crashed to an eight-week low of Rs 4,450 a quintal on July 15 and those of copra had plummeted to Rs 2,925-2,950.

However, contrary to the general expectations of market experts and dealers, the market has moved into a bullish phase.

The state government's decision to step into the market through co-operative societies is also another reason behind the recent spurt in prices.

As copra prices are lower by Rs 490 a quintal than minimum support price (MSP), the Kerala Coconut Growers Co-operative Federation (KERAFED) "� the nodal agency for procuring copra "� has intensified procurement through 35 primary agriculture co-operative societies.

MSP of copra is Rs 3,590 and the market support mechanism is being widely misused by bringing copra from Tamil Nadu and handing it over to co-operative societies.

It is alleged that the middlemen "� not farmers "� take advantage of market intervention operations as witnessed in the last few seasons.