Fear of Price Drop Due to NAFED's Dried Coconut Stock Sale

There is concern that the market price of dried coconut may decline due to NAFED, Indian Central Government agency, beginning to sell its stock of copra purchased from farmers. This situation is unlikely to affect Kerala significantly, as NAFED managed to buy only 102 tonnes of dried coconut there. However, producers and traders in Tamil Nadu may face substantial losses. In 2023, NAFED purchased approximately 39,000 tonnes of dried coconut in Tamil Nadu, and this stock is now being sold.

Stable Prices in Kerala

According to the Cochin Oil Merchants Association (COMA), the price of dried coconut and coconut oil in Kerala remains stable. Currently, dried coconut is priced at around $1,20 per kg, while coconut oil is priced at $1,85 per kg. Despite weak demand in December, strong local demand is expected to keep prices stable for the next few weeks. Internationally, the price of copra has increased by about 12% in major producing countries. High freight costs are making imports economically unfeasible for India, keeping the price of domestic copra strong. The export offer price of Indian copra remains high at $1,25 per kg, compared to $1,00 per kg from Southeast Asian countries like Indonesia, the Philippines, and Thailand.

Regional Differences

In Karnataka, decreased demand in North India has lowered the price of ball dried coconut. As a result, traders are converting ball copra into milling copra. However, demand for ball dried coconut is expected to increase during the festive season, potentially stabilizing prices. The local market's resilience and the current dynamics in international markets will play crucial roles in determining future price trends.

The sale of NAFED's dried coconut stock may lead to a market price drop, particularly impacting Tamil Nadu while Kerala remains stable. Strong local demand and high international copra prices are supporting the market, but regional differences and future demand shifts will be crucial to watch.