InfoSAWIT, KUALA LUMPUR - Palm oil, once known as the cheapest vegetable oil in the world, has lost its position due to declining production in major producing countries and an oversupply of other vegetable oils. In November 2022, palm oil was sold at a discount of $782 per ton compared to soybean oil, but it now commands a rare premium price.
In 2024, palm oil prices have risen by 10%, while soybean oil prices have dropped by about 9% due to better harvest prospects in countries like the United States. Nevertheless, significant structural changes in the palm oil market are not expected in the near future, given the unique characteristics of palm oil that make it attractive to various industrial sectors.
Bakers, restaurants, and hotels in India, as major users, are not expected to seek alternatives to palm oil anytime soon. However, some household consumption may begin to shift to other vegetable oils, according to Aashish Acharya, Vice President of Patanjali Foods Ltd., one of the largest vegetable oil importers in India. Additionally, the demand for biodiesel in Indonesia is also expected to support palm oil prices in the global market.
According to Bloomberg, palm oil is a versatile commodity used in a variety of products, including pizza, ice cream, shampoo, and lipstick. Furthermore, animal feed producers also use palm oil as a raw material, and some countries even process it into biofuel.
Gnanasekar Thiagarajan, Head of Trade Strategy at Kaleesuwari Intercontinental, noted that the palm oil price premium is likely to disappear after the festival demand in India decreases and production season in Southeast Asia increases. "If this does not happen, palm oil could potentially lose a significant market share to soybean and sunflower oils in India," he explained. (T2)