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All You Need To Know About Palm Oil As A Viable Trading Commodity

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Palm Oil is an edible vegetable oil that comes from the fruit of oil palm trees, the scientific name is Elaeis guineensis. Two types of oil can be produced; crude palm oil comes from squeezing the fleshy fruit, and palm kernel oil which comes from crushing the kernel, or the stone in the middle of the fruit. Oil palm trees are native to Africa but were brought to South-East Asia just over 100 years ago as an ornamental tree crop. Now, Indonesia and Malaysia make up over 85 percent of global supply but there are 42 other countries that also produce palm oil.

Palm oil is in nearly everything it’s in close to 50 percent of the packaged products we find Palm oil is an extremely versatile oil that has many different properties and functions that makes it so useful and so widely used. It is semi solid at room temperature so can keep spreads spreadable; it is resistant to oxidation so can give products a longer shelf-life; it’s stable at high temperatures so helps to give fried products a crispy and crunchy texture, and it’s also odorless and colorless so doesn’t alter the look or smell of food products. In Asian and African countries, palm oil is used widely as cooking oil, just like sunflower or olive oil is used for cooking in other parts of the world.

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As well as being versatile, compared to other vegetable oils the oil palm is a very efficient crop, able to produce high quantities of oil over small areas of land, almost all year round. This makes it an attractive crop for growers and smallholders, who can rely on the steady income that palm oil provides. supermarkets, everything from pizza, doughnuts, and chocolate, to deodorant, shampoo, toothpaste, and lipstick. It’s also used in animal feed and as a biofuel in many parts of the world.

Historians believe that the use of palm plants as a food source dates back 5,000 years ago to West Africa. Oil palm trees grow in warm climates that have an abundance of rain and sunshine such as Malaysia and Indonesia. The seeds are planted in small containers and are kept separate for about a year until they are mature enough to move into the farm. The plants are then cultivated by farmers until it is time to reap the fruits, usually 30 months after planting. The fruit is then steamed and transported to the pressing machines. Palm plants produce two tradable commodities. The pulp of the tree is crushed to form palm oil while the seed is crushed to form palm kernel oil.

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Basically, there are 2 types of palm oil namely: Red palm oil and White palm oil.

Red Palm Oil: Since the mid 1990s, red palm oil has been coldpressed from the fruit of the oil palm and bottled for use as cooking oil, in addition to other uses such as being blended into mayonnaise and vegetable oil. Oil produced from palm fruit is called red palm oil or just palm oil. It is around 50 percent saturated fat considerably less than palm kernel oil and 40 percent unsaturated fat and 10 percent polyunsaturated fat. In its unprocessed state, red palm oil has an intense deep red color because of its abundant carotene content. Red palm oil also contains sterols, vitamin E, and carotenoids such as alpha-carotene, beta-carotene, and lycopene.

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White palm oil : White palm oil is the result of processing and refining. When refined, the palm oil loses its deep red color. It is extensively used in food manufacture and can be found in a variety of processed foods including peanut butter and chips. It is often labeled as palm shortening and is used as a replacement ingredient for hydrogenated fats in a variety of baked and fried products.

 

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What Determines International prices of Palm Oil: The price of palm oil fluctuates based on supply, weather, competing oils, environmental concerns, and biofuel demand. In the international market, Palm oil is sold per metric tonnes. As at the time of publishing this video, Palm oil is sold at 1043.25 dollars per metric tonnes. However, have it in mind that this price is just intended to provide you with a reference only, rather than as a basis for making trading decisions.

 

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Now, let’s talk about top producers of Palm oil: Since 1980, palm oil production has increased tenfold with estimates that production will increase 50% percent by 2050. Indonesia is the largest producer of palm oil, followed by Malaysia as both countries account for 84 percent of the worlds palm production. There has recently been an increase in palm oil production in South America via Colombia, Ecuador and Guatemala.

It is estimated that there are 17 million hectares of mature palm oil plantations across the equator, producing a total of 62 million tonnes of palm oil in 2015. The second largest global vegetable oil, soya, takes up 120 million hectares, producing 48 million tonnes of soya oil.

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Here is a break down of the top palm oil producing countries: Indonesia produces an average of 33.4 million tonnes of palm oil annually which makes them the largest producer of the comodity.

Malaysia is the second largest palm oil producer witth an average of 9.9 million tonnes of palm oil annually.

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Thailand produces 1.8 million tonnes of palm oil making them the third largest producer.

Colombia is next with 1.2 million tonnes of palm oil annually.

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Nigeria is the fifth largest producer of palm oil in the world with an average production capacity of 0.94 million tonnes.

Ecuador follows Nigeria with an average of 0.53 million tonnes of palm oil

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Guatemala is seventh with 0.52 million tonnes of palm oil while Papua New Guinea is the eight largest producer with 0.5 million tonnes of palm oil

In terms of domestic consumption, Indonesia’s Domestic Consumption of Palm Oil increased 15.1 percent year on year Since 2014. At 14,270 Thousand Metric Tons in 2019, the country was ranked number 1 among other countries in the Domestic Consumption of Palm Oil. India, China and Malaysia respectively ranked number 2, 3 and 4 in this ranking. Sudan witnessed the best average annual growth at plus 41.3 percent per year, while Venezuela recorded the worst performance at minus 17.5 percent per year.

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India Domestic Consumption of Palm Oil have increased 1.9 percent year on year. With 10,035 Thousand Metric Tons in 2019, the country is ranked number 2 comparing other countries in Domestic Consumption of Palm Oil.

China Domestic Consumption of Palm Oil rose 3.9 percent year on year since 2015. At 6,900 Thousand Metric Tons in 2019, the country was ranked number 3 in Domestic Consumption of Palm Oil.

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Malaysia Domestic Consumption of Palm Oil grew 4.2 percent year on year. At 3,625 Thousand Metric Tons in 2019, the country was number 4 among other countries in Domestic Consumption of Palm Oil.

Pakistan Domestic Consumption of Palm Oil has been up 4.4 percent year on year. With 3,390 Thousand Metric Tons in 2019, the country was ranked number 5 comparing other countries in Domestic Consumption of Palm Oil.

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Top palm oil importing countries: International purchases of imported palm oil cost an estimated total 33.8 billion dollars in 2020.

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Overall, the value of palm oil imports increased by 19 percent for all importing countries since 2016 when international purchases of palm oil cost 28.4 billion dollars. From 2019 to 2020, globally imported palm oil appreciated by 12 percent.

An edible vegetable oil, palm oil is derived from the reddish pulp of oil palm plant fruit. Palm oil is a highly saturated vegetable fat used for lower-cost cooking, blending into mayonnaise and as a butter substitute. Palm oil is also an ingredient for biodiesel fuels.

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The 5 biggest importers of palm oil are India, China, Pakistan, Netherlands, Spain altogether, they bought 43.2 percent of total palm oil purchased via international markets in 2020.

India’s global purchases of imported palm oil totaled 5.1 billion dollars in 2020

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China’s global purchases of imported palm oil totaled 4.12 billion dollars in 2020.

Pakistan’s global purchases of imported palm oil totaled 2.1 billion dollars in 2020.

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Dutch global purchases of imported palm oil totaled 1.86 billion dollars in 2020.

From a continental perspective, Asian countries imported the highest dollar worth of palm oil during 2020 with purchases valued at 17.7 billion dollars or over half which is 52.3 percent of the global total. In second place were European importers at 24.8 percent while a fast-growing 15.7 percent of palm oil imported worldwide was delivered to Africa.

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Smaller percentages went to customers in North America at 4.3 percent, Latin America got 2.5 percent excluding Mexico but including the Caribbean, and Oceania got 0.3 percent led by Australia and New Zealand.

 

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Top Palm Oil exporting countries: Global sales from palm oil exports from all countries totaled 32.5 billion dollars in 2020. The overall value of palm oil exports rose by an average 16.2 percent for all exporters since 2016 when palm oil shipments were valued at 28 billion dollars.

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From 2019 to 2020, international sales of palm oil increased by 16.4 percent.

Used in food, cosmetics and as bio-fuel, worldwide demand for palm oil is robust. Indonesia remains the market leader for exported palm oil.

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The 2 biggest exporters, Indonesia and Malaysia, accounted for 83.6 percent of globally exported palm oil in 2020. Other big importers are: Netherlands with 1 billion dollars in export revenue, Papua New Guinea with 481.2 million dollars in export revenue, Guatemala with 465.7 million dollars in export revenue, Colombia with 406.3 million in export revenue, Honduras with 338.9 million dollars, Germany with 279.6 million dollars, Thailand with 157.3 million dollars and Estonia with 150.5 million dollars in export revenue.

Asian countries attracted the highest dollar worth of sales from exported palm oil during 2020 with shipments valued at 27.8 billion dollars or 85.6 percent of the global total. In second place were European exporters at 6 percent while 5 percent of worldwide palm oil shipments originated from Latin American countries excluding Mexico but including the Caribbean.

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Tinier percentages came from Africa which amounts to 1.72 percent and Oceanian countries with 1.57 percent led by Papua New Guinea.

Among the top exporters, the fastest-growing palm oil exporters since 2019 were: Honduras with up 135.9 percent, Turkey with up to 131.7 percent, Estonia with up to 43.2 percent, and Kenya with up to 37.9 percent.

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The sole decliner was Ecuador thanks to its minus 5.2 percent drop year over year.

On this note, we draw the cotton on this topic. We hope it was very informative.

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