Factors affecting Palm Oil Prices

Palm oil is considered as one of the most highly produced and commercialized product in Malaysia. Malaysia is the second most palm oil producing country in Southeast Asia with a production of 21,000,000 metric tons of crude oil. This accounts just second to Indonesia that produces 36,000,000 metric tons of palm oil.



Palm oil has a very high demand due to the high output per hectare in comparison with other vegetable oil. Palm oil has many uses including food products, cosmetics, toiletries and biodiesel. The versatility of palm oil is just one of the many reasons that contribute to the high demand of crude palm oil. The palm oil industry is currently soaring high with high prices offered for the crude palm oil.



The supply and demand of palm oil plays an important role in affecting the prices of this product. Since oil palm trees are mostly found in the Southeast Asia, in the countries of Indonesia and Malaysia, the changing weathers in these countries affect the prices. During the dry seasons, there is relatively low production of oil palm seeds, leading to low production of palm oil. Therefore, the prices of palm oil increases during this period. Other than that, China and India are the main importers of palm oil. The increasing population growth in these countries contribute to the high demands of palm oil, and therefore, resulting in higher prices.

Optimal Conditions for Oil Palm Growth


Oil palm trees basically thrive in humid conditions. Temperature ranges from 22°C to 24°C (minimum) and 20°C to 33°C (maximum) are the best for the optimal growth of oil palm trees. These trees require at least 5 to 6 hours of bright sunshine daily with 2500 to 4000 mm of rainfall per year. Therefore, Southeast Asia is the most suitable places for the growth of oil palm as long hours of sunlight and adequate rainfall is available throughout the year.



Soil Conditions

Oil palm trees can grow on wide varieties of soil types. However, the best type of soil for the growth of oil palm trees is alluvial soils which are rich in organic matter. Highly saline, alkaline, sandy and water stagnation soils should be avoided in order for the healthy growth of oil palm trees.



Seeds Propagation

Oil palm trees grow from the seeds. Seeds used for cultivation are picked from fruits using a depericarper. The seeds are then heated for 75 days at 40°C and then soaked in running water for 4 to 5 days to allow them to cool down. The seeds then start germinating within 10 to 12 days and are transferred to polybags filled with top soil, sand and well rotten manure. Regular watering and mulching is needed for the proper growth of the seeds. NPK fertilizer is used on the seeds before being transferred to the field. The seeds are then planted with space. The space should be left empty with regular weeding and cleaning for at least 3 years. Once the trees grow in the 3 years period, shade loving plants such as flowers, vegetables, chillies, ginger and pineapples can be planted around the trees.

CPO Mill information

The Malaysia palm oil mill sector has developed successfully in parallel with development of the oil palm plantation sector. In 1990, there were only 261 mill is operation with total 42.8 Million tonnes fresh fruit bunches (FFB). The number increased by 73.18% to 452 mill with a FFB 115.56 Million tonnes in 2020.  The increase in oil palm area is one of the factors that contributed to the increase in palm oil mill. With that period the oil palm planted area increase 2.03 Million Hectares (Ha) in 1990 to 5.86 million Ha in 2020.

MalaysiaMillProcess FFB Capacity
Peninsular Malaysia23957,377,680



Grading FFB

FFB will send to CPO will grading: FFB Grading 90% of OER achievement depend on FFB quality

Quality FFB: Ripe bunches with yellowish and reddish outer layer and its mesocarp are yellow coloured. This bunch has at least ten (10) loose sockets and more than fifty percent (50%) fruits were still attached to the bunch during inspection. Fruit bunches and loose fruits should be sent to the mill within 24 hours after harvest.

Product: OIL & KERNEL

  • OER – 20%
  • KER – 6.25%



Palm oil mill main stations:

NoMain sectionMain machine
1Fresh palm fruit bunch reception sectionLoading ramp
2Sterilization sectionSterilization tank
3Threshing sectionThreshing Machine Platform
4Digesting & PressingsectionDigester & Screw presser
5Oilclarification sectionClarificationTank
6Fiber separation sectionPolishing drun
7Palm kernel recovery section(1)Palm nut storage tank (2)Polishing drum (3)Nut grading screen (4) Palm nut Ripple mill (5)Separating column system (6)hydro cyclone equipment (7)Palm kernel drying bunker (8)Dry Palm kernel final storage warehouse
9Engine roomDiesel generator
10Boiler houseBoiler
11Water treatment 
12Effluent Treatment Plant 



Process Flow:

  1. Raw material reception: as for the first step of palm oil mill process, collecting the FFB and convey by trucks, then pour the fluster into the discharge door after weighed.
  2. Sterilization: FFB is air-tight sterilized in sterilizer of palm oil mill process,  the purpose is to prevent enzymes broken down, avoiding FFA content in oil further increase.
  3. Threshing: the purpose of threshing in the palm oil mill process is to separate the palm fruit from the FFB. The drum-type thresher is the usual machine to separate the fruit.
  4. Digesting and pressing:  the purpose of digesting in the palm oil mill process is to separate the pulp and nut and crush the palm pulp.  Then it is sent to continuous screw press. After pressing of palm oil mill process, oil palm fruit is divided into two parts: the mixture of oil, water, and solid impurities, and the press cake (fiber and nut).
  5. Oil clarification:  as for the oil clarification of the palm oil mill process, oil is clarified by the vibrate screen.
  6. Kernel recovery: as for the last step of palm oil mill process, The separated fiber material is sent to the boiler room as fuel; the separated kernel is transported to kernel warehouse by pneumatic conveying system for temporary storage.







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The History of Oil Palm in Malaysia

The oil palm trees, which are a very common sight nowadays, were only introduced in Malaysia, then Malaya, in the early 1870’s by the British. Originating from West Africa, this tree was first planted as an ornamental plant. It wasn’t until the year 1917 when the official commercial planting took place. In 1917, oil palm trees were planted for commercial use at the Tennamaran Estate in Selangor. This was the very first step to the plantation that we now see very abundantly.



During the early 1960s, the government of Malaysia introduced to reduce the economic dependence on rubber and tin under the agricultural diversification programme. This programme urged the producers to diversity their products and produce more of other products apart from tin and rubber. During this period, the plantation for oil palm increased drastically under the government’s programme. In the later 1960s, there were many farmers and smallholders who wanted to plant oil palm but were landless. The government then introduced land settlement schemes for these farmers and smallholders in order to encourage the plantation of oil palm while helping to eradicate poverty for the farmers and smallholders.



The plantations soon began to expand to what we could see today, making palm oil one of the biggest export products of Malaysia. Today, 4.49 million hectares of Malaysian land is used for palm oil cultivation. Malaysia produces approximately 17.73 million tonnes of palm oil and 2.13 tonnes of palm kernel oil. Being one of the largest industries in Malaysia, the oil palm plantation, cultivation and palm oil as well as palm kernel oil accounts for the employment of an estimated of one million people around our country.




Varieties of oil palm seeds

Oil palm seeds, though they all look alike from the outside, actually consist of different types of varieties. These seeds have differences in sizes. Some of the fruit types are bigger than the others. Also, the pulp, which is the oily part of the seed, is not the same size while some kernels do not have shells at all. These differences among the varieties are based on the type of seeds.




There are generally three types of oil palm seeds commonly found; dura palms, pisifera palms and tenera palms.

  • dura palms have kernels with a thick shell.
  • pisifera palms have kernels with no shell.
  • tenera palms have kernels with a thin shell.




In order to get a high palm oil yield, the fruits should possess a lot of pulp, with a shell that is not too thick and a big kernel. Therefore, researchers have developed a cross between dura palm and pisifera palm in order to produce fruits that have lots of pulp, thin shells and large kernels. The cross between these two is known as tenera palm. In order to produce the tenera palm variety, the female flowers from the dura palm are fertilized with the pollen from pisifera palm. The fertilized flowers then turn into fruits of the tenera variety. The tenera palms are most commercially used worldwide due to their high oil yields.




Oil Palm and Our Lives

Oil palm is one of the most beneficial cultivation products that could be found in Malaysia and other palm oil producing countries. Without noticing much, oil palm actually do play important roles in our lives. The palm oil industry produces edible oil from oil palm fruits. The oil is a good choice for cooking as it maintains its properties even under high temperatures during cooking. This enhances the taste of food while the creaminess and smoothness of the oil makes an excellent cooking ingredient.



Other than edible oil, palm oil is also used in daily personal care items such as bathing soaps, detergents and many other cleaning and beauty products.



Deforestation takes place at high rates for the plantation of oil palm trees. In order to create lands for the cultivation of oil palm, many acres of land are cleared daily around the country. At first, this leads to air pollution and animals lose their habitats. However, as the oil palm trees grow larger, the balance of the ecosystem can be returned. Animals take shelter in the plantations while the carbon cycle is balanced by the growing oil palm trees.



Other than that, millions of job opportunities are created by the oil palm industry. In Malaysia, it is estimated that around a total of one million jobs originate from this industry. These jobs include smallholder farmers, fruits pickers, tree planters, large companies, the import and export companies and various other jobs.




Palm Oil vs Global Food Security

The oil palm tree has many usages. It provides benefits from edible oils to biofuels and biochars while also being a food source for livestock. Therefore, almost all the parts of the fruits can be used to produce a useful product. Since the fruits of an oil palm tree can be used for both food and fuel, there is a debate of food vs fuel on whether to use the fruits  more as a food source or as fuel.

Palm oil is a rich source of edible oils. Palm oil is a healthy and versatile substitute for traditional oils. The cholesterol-reducing property of palm oil is one of the most important points that make this oil so famous and widely used. Other than that, palm oil contains antioxidants, vitamin E, and carotenoids which help reduce the risk of cancer and heart diseases.




Other than being used for edible oil production, oil palm is also a good feedstock for biomass, biogas, and biodiesel production. A large amount of the oil palm fruits go to the production of these fuels. The main parts of the oil palm that are used for fuel production are the oil palm fruits, kernels, and shells. High-quality palm oil can be produced from these parts of the plant.




Since the parts used for both fuel and edible oil production are the same, the food vs fuel debate is present. Therefore, as both industries are equally important for the Malaysian economy, a proper balance should be reached in order to produce enough feedstock for the production for both food and fuel respectively.



All about Urea Fertilizer

Urea fertilizer is made up of 46 percent of nitrogen. Therefore, it is an ideal source of nitrogen for plants. Urea fertilizer is made up of mainly ammonia. In order for effective absorption to occur, a healthy soil microbiota population is needed in the soil. Having a high nitrogen content, urea fertilizer is excellent for plants that require nitrogen to promote green leafy growth and to make plants look lush. Mainly, urea fertilizer is used for bloom growth due to the high nitrogen content without phosphorus and potassium.

Urea fertilizer should not come in contact directly with the seeds. Therefore, it should be applied as a top dressing during sowing period rather than around the seeds. Urea should also be mixed with earth or sand before application in order to avoid over concentration of nitrogen in the soil around the plant.




How is it produced?

Urea is found as a natural component in animals and human urine. This fertilizer is the very first type of organic fertilizer that can be manufactured using chemical processes. In 1828, a discovery was made when potassium cyanate was treated with ammonium, producing urea from the process. Currently, urea fertilizer is produced by the processing of ammonia and carbon dioxide.




Advantages and Disadvantages of Urea Fertilizer

One of the advantages of urea fertilizer is its high content of nutrient along with its ability to increase crop yields by a great amount. Other than that, this type of fertilizer poses no explosion hazard and is easy to handle while having a wide range of application.

On the other hand, soil quality will be degraded when urea is used excessively in the soil. Over a long term of usage, urea fertilizers deplete the soil quality as there is a loss in beneficial soil microbes in the soil. Excessive usage and leaching can also cause adverse effects on the environment.



Palm Kernel Shell as Bio-fertilizer

What is bio-fertilizer and Palm Kernel Shell (PKS)?

Palm kernel shell (PKS) is the portion of the palm seed left behind once the nut is removed for oil production. Previously, before PKS was used as a recyclable source, the shells were merely buried into the soil or burned in order to dispose them. These activities cause pollution to the environment as well as loss to the producers.



How to produce fertilizer from PKS?

Bio-fertilizer from PKS is mainly produced via the pyrolysis process. During the process, the source is treated in reactors with very high temperatures with the absence of oxygen. The product is mainly in solid form. From the pyrolysis, biochar of PKS will be produced. The biochar is later treated with other biomass such as chicken manure to produce bio-fertilizer that can then be used to directly fertilize plants.



Advantages of using PKS for bio-fertilizer production:

The main use of PKS as discussed in this article is as fertilizer. Studies has shown that using bio-fertilizer produced from PKS has a positive effect on the growth of plants. Soil with high acidity benefits from the application of this bio-fertilizer by being able to provide more nutrients to the plants. Other than that, this bio-fertilizer also has the ability to promote water retention in the soil which aids in the growth and health of the plants.

Another advantage of the usage of PKS is the reduction of waste from palm oil mills. Since unrecycled PKS will only be burned and disposed, recycling the waste into a reusable source could benefit the mill by selling the PKS to companies that produce bio-fertilizer from this material. This, in return, could also reduce the pollution to the environment due to the burning and disposal of the waste.

The PKS charcoal that can be produced from PKS is a precursor for activated carbon. Currently, activated carbon is mostly prepared from coconut shells. This source of raw material is more costly than using PKS for the same product. Therefore, if PKS is recycled to produce activated carbon, the cost of processing could be reduced while increasing the outcome.



Palm Oil Mill Waste as Fertilizer

The palm oil industry is one of the largest industries in Malaysia. This rich with resources country processes palm oil both for local usage and for exports. Being one of the largest palm oil producers, there is also a lot of waste generated by palm oil-producing factories. If mismanaged, the waste could lead to pollution. The good news is that most of the waste from a palm oil factory can be recycled to produce a different product. Several common wastes and their recycled products are discussed here. Palm Kernel Shells (PKS) The kernel shells are the left behind fractions of the palm seed once the nut is removed by the crushing mill. The shells consist of a mixture of large and small particles and dust-like particles. These kernels have a low moisture content. Therefore, it is easier to process the kernels as they require less biological activity, energy, and power consumption during processing (due to their low moisture content). A process known as microwave vacuum pyrolysis converts the PKS into fertilizer. Via this process, the fertilizer is formed as biochar. Biochar is an organic bio-fertilizer that causes less harm to plants than chemical fertilizers. In a study, biochar was used to fertilize oyster mushrooms. The result came out impressive with bigger, heavier as well as faster grown mushrooms.

Empty Fruit Bunches (EFBs) As the name describes, empty fruit bunches are simply the bunches of fruits that are left behind once the oil palm seeds are removed. Some factories burn these bunches, causing air pollution. Therefore, instead of merely burning the EFBs, steps can be taken to convert the waste into compost fertilizer. The EFBs could be composted into fertilizer that can be used for various plants, fruits, and crops. Larger companies process the EFBs in high pressured machines to quicken the composting process before applying the fertilizer to crops. Small scale farmers however, directly place the EFBs around their oil palm trees where the bunches act as a water storage source, reduce weeds and also fertilize the trees as they slowly decompose. 

Palm Oil Mill Effluent (POME) One of the highly polluting waste of palm oil mills is Palm Oil Mil Effluent (POME). POME is a form of liquid that is normally discarded into nearby ponds, leading to groundwater and soil pollution as well as releasing methane gas into the environment. This liquid effluent can be recycled into fertilizer. For the fertilizer production, the raw effluent is first treated anaerobically before adding to chicken manure. This mixture forms an excellent NPK fertilizer which has been proven to increase the leaves size of kangkung while producing fresher produce. Other than kangkung, it could also be used as a fertilizer for other types of vegetables and fruits.