The Hindu Business Line : Copra MSP unlikely to affect market

THE announcement of minimum support price (MSP) of Rs 3,300 and Rs 3,550 per quintal for milling copra and ball copra is unlikely to make any impact in the market given the upward trend in the open market.

The Government should have announced the MSP in early January last when the prices were ruling lower. Now the open market price of copra is Rs 3,200-3,250. In fact, last week it increased to Rs 3,450 a quintal, according to trading sources.

"Even if the open market price dropped to Rs 3,100-3,150 per quintal the farmers are unlikely to sell their produce to Nafed (National Agricultural Cooperative Marketing Federation) due to procedural hurdles and delay in payment," trading sources told Business Line.

If the farmer sells copra in the open market he will get the payment immediately. However, if the procurement agencies manage to buy any tangible quantity in the coming weeks it will have a negative impact on the prices when they resort to liquidating the stocks later, according to them.

Given the present trend, it is unlikely that Nafed will be able to procure any substantial quantity of copra. "If the present trend is any indication there is no possibility of a price crash in the coming months,'' the sources said.

Since the commencement of the futures trading in copra and coconut oil, the farmers are getting advance information about the price. This has paved the way for them to create some holding capacity for their produce, according to the sources.

As a result, there "is no distress sale or selling pressure now'', they said. In fact, the farmers can now regulate the prices at present.

Last week, the prices of coconut oil and copra went up to Rs 4,800 and Rs 3,450 a quintal respectively. But it fell to Rs 4,575 and Rs 3,200 on Tuesday following the emergence of a consumer resistance, the sources said.

The drop in the price is seen as a temporary phenomenon due to technical correction. Even though coconut oil is available at Rs 48 per kg in the terminal market, it is sold at Rs 56 per kg at the retain end.

Meanwhile, palmolein is available at Rs 38 per kg.

Eying on the ensuing Onam demand next month, Kerafed had purchased 5,000 tonnes of copra at Rs 3,450 per quintal last week, the sources said.

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