The following blog covers a detailed and in-depth analysis of Crude Palm Oil which covers its definition, major household and industrial applications, production, price analysis and leading manufacturers in the industry. Hence, the leading industry players can gain some insight from the following post regarding the market dynamics of oil in the present market.

Crude Palm Oil: Explained with Uses

Palm oil (scientific name is Elaeis guineensis), an oil used mainly for human consumption, is derived from the pulp of the fruit of oil palms. This fruit pulp’s colour is red, which explains the colour of crude palm oil, which is naturally similar to the colour of the pulp owing to the high inactive vitamin A levels. It contains high levels of beta-carotene.

The oil is mainly used for cooking purposes and food products. Still, besides that, its derivatives or fractions can be employed in the production of pre-packaged food, cleaning products, soaps, cosmetics, hair care and personal care products.

Food Applications of Crude Palm Oil

Crude Palm Oil (palm olein, stearin / super olein and PMF) is extensively used in food-related applications. Palm oil products like hydrogenated or inter-esterified palm oil are used to make cake shortenings along with butterfat which results in cakes that have better baking properties. Certain hydrogenated palm oil products are ideal for generating a series of speciality products like confectionery fats and toffee.

Palm oil has unsaturated and saturated fatty acids in equal amounts, which makes it semi-solid at room temperature. The oil’s property and melting range allow it to act like a critical element in the production of margarine and shortening without hydrogenation.

Therefore, due to a lack of hydrogenation need, the generation of trans fatty acids can be prevented, which is better for health.

Palm oil is ideal for frying applications owing to its properties, like being non-sticky and non-foaming. Furthermore, its consumption has been noted not to affect total cholesterol levels, which gives rise to its demand. Also, it has other health benefits like lowered risk of stroke, reduced oxidative stress, hypertension, and improved vitamin A levels.

Industrial Applications of Crude Palm Oil

The main industrial products made using Crude Palm Oil are hand and body lotions, soap, epoxidized palm oil and fatty acid methyl esters. In the oleo-chemical industry, palm kernel and palm oil have the role of producing a chemical feedstock, like fatty esters and fatty acids, which are used to make a range of non-food products.

The oil can be used directly to create biofuel; palm oil mill effluent (POME) is used to generate renewable bio-energies, including bio-hydrogen via anaerobic digestion and biomethane. This helps control the POME waste chemical oxygen demand (COD) level of wastewater.

Also, palm fruit bunch residues are used for firing the boilers, facilitating the generation of steam and electricity in the processing plant. Lastly, the fronds, trunks, and kernel shells are used to produce products like furniture, pulp and paper, and building materials.

Production of Palm Oil

  • Palm Oil Production Via Extraction from Palm Fruit

At first, the palm fruits go through sterilisation by smoking or roasting after threshing them. Another method to do this is via boiling or steaming of the fruits prior to the threshing process. In the following step, threshing is carried out, where the fruits are separated from the group and transported to the rotary drums. In the next step, the fruit is crushed in order to remove the palm fruit’s skin and pulp. This results in the separation of the oil from the fruit by squeezing the fruit using metal plates, which yields the oil via extraction. At last, the crude palm oil is processed and filtered, resulting in refined and pure palm oil.

Key Players Participating in the Palm Oil Industry

  • FGV Holdings Berhad
  • IOI Corporation Berhad
  • Sime Darby Plantation Berhad
  • Musim Mas Holdings Pt. Ltd
  • Bumitama Agri Ltd.
  • Adani Group
  • Emamiltd
  • Asian Agri
  • Apical Group Ltd.

Palm Oil Price Trend And Factors Impacting It

Crude Palm Oil is derived from palm fruit extraction, which results in the oil which is further processed and refined to yield refined and pure palm oil.

North America 

The reduced demand in North America from downstream industries resulted in the decline of Palm Oil prices. Owing to the lifting of the ban on exports of Indonesian Palm Oil recently, the costs of the product dropped. The Asia Pacific countries, particularly Malaysia and Indonesia, are where countries from North America import their Palm Oil. Because of the surplus of inventory in the local market, the price of the product was slashed later. The unexpected lifting of the ban from Indonesia helped keep the demand sustained coming from the downstream sectors and a drop in the product’s price.

Asia Pacific

The Palm Oil price is see-sawed in the Asia-Pacific countries due to inconsistent market sentiments with regard to the product. The Chinese palm oil market persisted in falling, which allowed it to sustain the falling prices. After the export tax deduction in Indonesia, the most significant Palm Oil producer worldwide, the palm oil price for Malaysia’s futures market is plunging. The regional Palm Oil futures have dipped alongside the market due to this. Furthermore, the prices dropped on the back of considerable inventories in the domestic market. The prices increased later owing to a surge in demand from end-user industries.

Europe

The Palm Oil price in Europe dipped recently, aided by the low prices of the product in the last few months. Prices dropped presently due to the sluggish consumer sentiments in the domestic market. There were no intrusions in supply in the domestic market due to huge stocks. Later, the prices were reduced on the back of Indonesia relaxing its ban on export, which did not have any long-term impacts on the region in Europe. But as there was minimal demand and sufficient supply in the European nations, prices declined once again.

Certain commodities like crude palm oil could be a tough nut to crack concerning the price dynamics, procurement, and supplies. Hence, dedicated market intelligence and thorough evaluation of such products are some of the inevitable requisites while dealing with them. Leading procurement experts and market evangelists can help the cause and lay a sturdy procurement and supply chain foundation.

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