Coconut prices surge amid shortage of supply in Kerala
Coconut prices in Kerala have nearly doubled in three weeks due to a supply shortage, with prices for green coconuts, copra, and coconut oil rising sharply. Traders attribute the surge to post-Onam stockpiling by farmers and reduced production in key areas. Prices are expected to rise further ahead of the Sabarimala pilgrimage season. Increased demand from North India, global demand for lauric oils, and fluctuating supply have contributed to the rally. Farmers are holding onto stocks, creating an artificial shortage.
KOCHI: Coconut prices in Kerala are skyrocketing, almost doubling in just three weeks with copra and coconut oil prices mirroring the surge. Traders predict further hikes ahead of the Sabarimala pilgrimage season.
The price spike is attributed to a severe coconut shortage across south India. According to experts, farmers and traders are holding onto stocks, reducing market supply.
“The surge is spontaneous, post-Onam festival. Green coconut prices touched Rs 50-55 per kg from Rs 20-25 last month. Retail coconut oil prices have jumped Rs 70-80, reaching Rs 230-240 per kg,” Talat Mehamod, a trader at the terminal market of Kochi, told TNIE,
“Reports from Vadakara, Kuttiadi and Nadapuram suggest that production has dropped and there is short supply in the market. Procurement by north India-based traders has also increased recently adding to the tightness,” he said.
Copra prices have also risen at Kangayam, Tamil Nadu’s prominent trade hub, with Mumbai’s large business houses procuring substantial quantities, Talat added.
Previously, the huge supply base in Tamil Nadu used to have a depressing effect on the coconut oil market in Kerala as it is the only state to consume this oil for edible purposes.
In Kerala, the peak season for coconut starts in January-February and extends up to June while in Tamil Nadu supplies start coming from March. Traders expect the market to remain firm and steady till March when production season starts in Kerala.
Another factor that could firm up the market further is the Sabarimala pilgrimage season. Pilgrims to the hill shrine of Sabarimala take 4-5 coconuts per person as offerings to the deity, and annually more than one crore people visit the temple.
P K C Rasheed, a trader at Vadakara market, noted that ball copra prices briefly touched a record high of Rs 250 per kg before easing due to increased supply.
“The copra and coconut price rally occurred earlier than expected,” Rasheed said. “Typically, the market sees gains during north Indian festivals, driven by increased demand.”
He added that the supply in Vadakara market has increased to 2000 sacks after the prices rallied up.
Ball copra is mostly transported to the up-country for religious purposes and snacks manufacturers.
The rally has seen farmers holding on to copra creating an artificial shortage, he added.
Ubais Ali from Mezhukkattil Mills, a prominent supplier of coconut products, said that the supply has been short from all southern states for a while, but the price was held back in anticipation of the huge stocks with NAFED.
He added that the reason for the rally is the huge demand expected for lauric oils globally as European countries plan a cut back on vegetable oils-Regulation on Deforestation-free Products – EUDR.
“The rally seen now was quick and has to do with the fact that production and yield have come down and this is a cycle. We anticipate prices to firm up and touch record levels in 2025,” he said.
Coconut oil is primarily utilised for commercial purposes, with approximately 80% of production dedicated to industrial applications, mainly as a surfactant.
India is the world’s largest importer of edible oils and currently fulfills nearly two-thirds of its demand through import of palm oil, soyoil, and sunflower oil. India’s edible oil imports rose to 15.5 million metric tonnes in 2023-24.
Prices of substitute oils like palm oil and palm kernel oil are also on the higher side and currently, palm oil is retailing at Rs 130 per kg. The difference between coconut oil and its competing oils must be higher than 20% for substitution and the current rally could trigger it.
In 2022-23, coconut was cultivated in 7.60 lakh ha in Kerala occupying 30 per cent of the gross cropped area. The production and productivity in 2022-23 increased to 5,641 million nuts and
7,419 nuts per ha respectively. However, the performance of the coconut sector in the State has been fluctuating over the last five years.
Source Link : https://www.newindianexpress.com/states/kerala/2024/Oct/10/coconut-prices-surge-amid-shortage-of-supply-in-kerala
