Coconut oil prices have been rising consistently ahead of festivities in India and supply constraints

Coconut oil and copra prices have seen a sharp rise recently. The trend is expected to gain further momentum as the festive season in North India approaches. Key factors driving this surge include heightened demand for tender coconuts and ongoing drought conditions in Karnataka, which have resulted in lower production and limited copra supply.

In addition, global supply constraints across several commodities have further contributed to the upward price movement of coconut oil. With disruption in the supplies of lauric acid, derived from palm and palm kernel oil, being a key ingredient in toiletry products like hand washes and body washes, a market shift has been redirected toward coconut oil as an alternative. This substitution has prompted increased stockpiling by industries concerned about the potential impacts of new regulations in Europe related to palm oil.

The recent hike in import duties on oils like sunflower, soybean, and palmolein has also had a ripple effect on the coconut oil market. Meanwhile, Tamil Nadu, currently the primary supplier of copra, is grappling with a significant shortage, which is driving prices higher despite reduced demand from large-scale buyers. As the festive season nears, the anticipation of increased demand for edible copra is likely to push prices even higher.

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While farmers are benefiting from better returns, retail consumers are feeling the pinch as the cost of edible oils continues to rise. In Kerala, coconut prices have nearly doubled in a short span of three weeks, mirroring the surge in copra and coconut oil rates, driven by a widespread shortage in southern India. With reduced production and increased procurement by traders, particularly in North India and large business hubs, the market remains tight, keeping prices elevated.