Westford, USA, Nov. 17, 2022 (GLOBE NEWSWIRE) -- Global palm oil market is forecast to grow at a CAGR of 5.2% through 2021, largely due to increasing demand from Asia and North America. The overall market size is expected to reach 78 million metric tons by the end of 2022, up from 72 million metric tons in 2017. Indonesia is responsible for producing over 57% of the global palm oil, which is followed by Malaysia, which accounted for over 27% of the global market share. Collectively these two countries produced over 61 million tons of palm oil in 2021.
SkyQuest sees two principal drivers for this growth: a rising population in developing countries and an increasing appetite for healthier foods. In addition, the rise in electric vehicles will result in higher demand for biofuels, including palm oil. Palm oil is currently the world's second-most-produced vegetable oil after soybean oil, and it is expected to continue growing in popularity. There are several reasons for this: palm oil has high levels of saturated fatty acids that make it a good choice for cooking and frying; it is versatile and can be used in a wide range of products; and it is affordable.
Apart from this, there are some concerns about the impact of palm oil on climate change. According to the SkyQuest study, increased production of palm oil could lead to significant emissions of greenhouse gases if trees are cut down faster than they can be replanted. However, alternatives to palm oil are still being developed, so there is still hope that this will not be an issue in the long term.
Although there are some concerns about sustainability, opportunities outweigh these challenges for the palm oil market. Overall, it expects production levels to moderate over the next couple of years as producers move towards more sustainable production practices, such as forest conservation or improved agronomic practices.
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Rapid Expansion of Soy Production is Threating Growth of Palm Oil Market
The biggest threat to global palm oil supplies is the rapid expansion of soy production in Southeast Asia, which uses large amounts of the area's available land and water. The price of palm oil has tripled in recent years due to a deteriorating environment, social unrest, and environmental concerns. As per SkyQuest study, the global soy oil production in 2021 was recorded at around 60 million metric tons but it went on to increased to 62.247 million metric ton, which resulted in a little surplus and reduced to dependability on palm oil by 4.8%.
According to a recent report on global palm oil market by the commodity information provider, Input-Output, soybean production is projected to surge by 69% over the next decade as compared to a modest 6.4% growth for palm oil. The reason for this rapid expansion is due in part to increasing rural incomes and government subsidies in developing countries that favor the cultivation of soybeans. In addition, the carbon footprint of soybean cultivation is 50% smaller than that of palm oil.
Recently in November 2022, India, the largest importer in the global palm oil market, has cut down the import of palm oil due to increased production of soy oil. In short, India witnessed a cut of around 4.8% in the palm oil import. In fact, global market witnessed around 45% growth in the demand for soy oil after Indonesia banned the export of palm oil.
With the rise of alternative oils like olive oil and rapeseed, demand for palm oil has plummeted. If current trends continue, there could be a global shortage of this versatile cooking oil by 2025. Palm oil is used in foods like margarine, baked goods, ice cream, noodles and cookies. It also appears in cosmetics, car products and biofuel.
However, this burgeoning soy industry poses a threat to the growth of palm oil as it displaces imports of vegetable oils from tropical countries - leading to increased CO2 emissions. As demand for these oils rises, so too does the risk that deforestation and greenhouse gas emissions will increase even more rapidly than they are at present.
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Positive Impact of Russia Ukraine War on Palm Oil Market
The current Russo-Ukrainian conflict is having a significant impact on the palm oil market, as both countries are major producers of sunflower oil. In fact, these two countries are responsible for producing over 50% of the global sunflower oil. In Ukraine, domestic production has fallen by 60% since the start of the war due to damage to plantations, while exports have also taken a hit, with Indian and European buyers redirecting their attention towards other suppliers and alternatives like palm oil. As of 2021, the global sunflower oil production was pegged at 50 million tons, out of which Russia and Ukraine produced over 25.8 million tons. These reductions in production will likely lead to higher prices for consumers and result in a gain of around $ 1 billion for the palm oil market.
The impact on the palm oil market
has several consequences. Firstly, production has stopped which has led to a scarcity of the commodity. Secondly, transportation is one of the major inputs for this industry so a disruption in supply has resulted in higher prices. Finally, since this commodity is also used as a substitute for crude oil in many industrial products, an increase in price leads to wide-scale price hikes across different market sectors.
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Major Players in Global Palm Oil Market
- FUJI OIL CO., LTD. (Japan)
- Genting Plantations Berhad (Malaysia)
- Godrej Agrovet Limited (India)
- Golden Agri-Resources Ltd. (Singapore)
- PT Smart Tbk (Indonesia)
- Intercontinental Specialty Fats Sdn. Bhd (Malaysia)
- IOI Group Berhad (Malaysia)
- Kuala Lumpur Kepong Berhad (Malaysia)
- PT Astra Agro Lestari Tbk (Indonesia)
- PT Dharma Satya Nusantara Tbk (Indonesia)
- PT Indofood Sukses Makmur Tbk (Indonesia)
- P. T. Musim Mas (Singapore)
- PT PP London Sumatra Indonesia Tbk (Indonesia)
- PT Salim Ivomas Pratama Tbk (Indonesia)
- Nv Siat sa (Belgium)
- Sime Darby Plantation Sdn Bhd (Malaysia)
- New Britain Palm Oil Ltd. (Papua New Guinea)
- United Palm Oil Industry Public Company Limited (Thailand)
- United Plantations Berhad (Malaysia)
- Wilmar International Limited (Singapore)
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