Sri Lanka coconut prices plunge 30-pct at auction; export ban may be lifted
ECONOMYNEXT – Sri Lanka’s fresh coconuts dropped to an average 30 percent to 30,793 rupees for 1,000 nuts at the latest auction in August 2018 from a month earlier, amid a global fall in commodity prices and weak demand from desiccated coconut producers.
Industry sources said an export ban on fresh coconuts may be lifted to help boost farm gate prices.
In July the average price for coconuts were about 45,000 rupees.
At the auction on August 16, 1.3 million nuts were sold at the Colombo auction, with 1.7 million nuts being offered for auction.
In the previous auction, sellers withdrew most of the nuts after demand fell.
Sri Lanka may lift a ban on the export of fresh coconut exports, imposed when coconut prices soared above 50,000 rupees earlier in the year, officials said.
Sri Lanka only exports small volumes of fresh coconuts, but the move may help prices, industry officials said.
The recent price falls are mainly coming from weak demand from the desiccated coconut sector, which stopped exports and lost markets when prices spiked earlier in the year, officials said.
It may take time for Sri Lanka to regain buyers lost to other countries.
Coconut prices have plunged in most producing countries.
In the Philippines, fresh coconut prices had fallen 64 percent in the 12-month to July from 12.50 peso to 4.50 pesos, report said.
Sri Lanka’s retail prices have also started to fall, with prices down to about 55 rupees a nut from around 60 rupees last week, with more weakness expected.
Global commodity prices have been falling sharply amid an underlying strengthening of the US dollar.
It is not clear yet to what levels coconut auction prices will fall.
When prices start to fall, commodity prices tend to overshoot, economists say as wholesalers and traders try to reduce stocks.
The prices later bounce back tomore normal levels, in a so-called ‘commodity price snapback’ though not to levels at the height of the bubble.
In 2016, coconut auction prices fell as low as 22,000 rupees per 1,000 nuts as oil prices also fell amid an underlying weakness of the US dollar.
With fresh coconut prices falling desiccated coconut and coconut milk powder production will pick up, industry analysts said. (Colombo/Aug21/2018)