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.
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.
Malaysian palm oil price up on expectation of better export data
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was up 1.2% at 2,047 ringgit ($491) per tonne at the close.
KUALA LUMPUR: Malaysian palm oil futures jumped more than 1% on Wednesday as traders bet upcoming export data would overshoot forecasts.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was up 1.2% at 2,047 ringgit ($491) per tonne at the close.
Cargo surveyors and an independent inspection company had over Saturday and Monday reported more than 15% falls in exports for the June 1-15 period.
“The export rumour for June 1-20 period shows better numbers than in the earlier period,” a futures trader based in Kuala Lumpur said.
In other related oils, the Chicago July soybean oil contract was last up 0.5%.
The September soy oil contract on the Dalian Commodity Exchange fell 1.2% and the Dalian September palm oil contract was also down 0.2%.
Palm oil prices are affected by movements in related edible oils, with which it competes for global market share. – Reuters