22/04/2010 (Financial Express), Kochi - Rise in prices of palm kernel oil has helped coconut oil prices to remain steady even during peak coconut producing season in Kerala.

Traders said usually coconut oil prices ease during the peak coconut producing season in the state that starts in January and extends upto June, but this year the situation is different.

Even though coconut supplies from Tamil Nadu and Karnataka have started to come into the market from March, it still hasn’t had an impact on oil prices, Talat Mehamood, a trader at the terminal market said.

Though Kerafed, the nodal agency in the state for coconut and copra procurement, has been releasing some stocks the market has not responded to the increased supply, Mehamood said.

Kerafed, the agency for procurement in Kerala has nearly 25,000 tonne of stock with it. The bulk of the procurement has been done in Tamil Nadu, which produces 40% of the coconut in India .

Mehmood feels that increased price of the substitute palm oil and palm kernel oil might have helped in steadying the market rate for coconut oil.

“Palm kernel oil is a very close substitute for coconut oil. It is also used in adulterating coconut oil when the price difference is huge,” he added.

Palm kernel oil is selling at Rs 50 per kg as against Rs 44 per kg a few weeks before, he said.

Paul Francis of KLF oil Industries feels procurement by Government agencies has also helped in keeping the market firm.

State agencies started copra procurement in April but so far the market was not reflecting the effort, traders said.

The support price offered by Government agencies (of Rs 44.50 for a kg of copra) is equivalent to the oil price of Rs 67-68.

Availability of copra in the market is lower than usual, Paul Francis said, adding that labor shortage in Kerala is also helping in keeping supplies low.

“Severe shortage of labor has altered the supply. Supply of coconut and copra is not regular but staggered. Frequency of plucking the coconut has come down,” he added.