PALMOILMAGAZINE, KUALA LUMPUR – Once known as the world’s most affordable edible oil, palm oil has lost its low-cost advantage due to declining production in major producing countries and an oversupply of alternative edible 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 price premium.
In 2024, palm oil prices have risen by 10%, while soybean oil prices have dropped by about 9% due to improved harvest prospects in countries like the United States. Despite this, no significant structural shifts are expected in the palm oil market soon, given its unique characteristics that make it appealing across various industries.
Key consumers such as bakeries, restaurants, and hotels in India are unlikely to seek alternatives to palm oil immediately. However, some household consumption may shift to other edible oils, according to Aashish Acharya, Vice President of Patanjali Foods Ltd., one of India’s largest edible oil importers. Meanwhile, demand for biodiesel in Indonesia is expected to support palm oil prices in the global market.
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As reported by Bloomberg, palm oil is a versatile commodity used in a wide range of products, from pizza and ice cream to shampoo and lipstick. It is also a key ingredient in animal feed and is increasingly being processed into biofuel in some countries.
Gnanasekar Thiagarajan, Head of Trading Strategy at Kaleesuwari Intercontinental, predicts the price premium for palm oil may dissipate after India’s festival demand subsides and production in Southeast Asia increases. “If this doesn’t happen, palm oil risks losing a significant market share to soybean oil and sunflower oil in India,” he noted. (P2)
