Nafed's Market Intervention Boosts Prices in Southern States

Nafed's recent procurement of copra from the open market has led to a significant price increase for coconut oil in Kerala and Tamil Nadu. Thalath Mahmood, director of the Cochin Oil Merchants Association (COMA), reported that copra prices in Kerala have reached $1,19 per kg, with coconut oil priced at $1,79 per kg. Meanwhile, in Tamil Nadu, prices have climbed to $1,12 for copra and $1,62 for coconut oil.

Strategic Timing Influences Market Stracture

The timing of Nafed's procurement, initiated just before the Lok Sabha polls, along with increased demand during Ramzan and the Vishu festival, has revitalized the market. "The prices are expected to hold steady until the end of government procurement," Mahmood added. He also mentioned that Kerala is starting its procurement phase.Despite these price increases, the demand in upcountry areas remains subdued as the harvest season begins in key producing regions like Kerala, Tamil Nadu, and Karnataka. This low demand contrasts with the recent price trends.

Government Sets Minimum Support Prices

To stabilize the market, the government has set the minimum support price (MSP) at $1,39 for milling copra and $1,44 for ball copra. K.K. Devraj, an industry consultant, noted that copra and coconut oil prices have been inching up over the past few weeks. This rise is attributed to Nafed's purchase at higher prices, particularly in Karnataka. "The market is uncertain about the sustainability of these high prices," Devraj expressed, pointing to the ongoing copra arrivals and the typically expected price drop.

Broader Edible Oil Market Trends

Contrasting with copra and coconut oil, sunflower oil and soya oil prices are slightly lower than those of palmolein. The high import volume of sunflower oil, driven by abundant supplies and declining palm oil inventories, has influenced these trends. "Consumers are benefiting as most edible oil prices are relatively low, providing them with a variety of choices in both product types and pricing, except for gingely oil," Devraj concluded.