supply and demand Tag

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.