Global Palm Oil Market Revenue Growth Predicted During 2017-2022

Posted on 2019-01-04 by Mark Hub in Food & Beverage // 0 Comments

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The growth of the palm oil market is dependent on several market sentiments and supply-demand factors. High price volatility is likely to hit the palm oil market as palm oil captures the largest volume of vegetable oil traded across the globe and enforcement of new policies and regulation against the backdrop of growing awareness regarding irresponsible plantation practices. Palm planters are expected to be the most affected stakeholders as their profit margin is influenced by weakening export outlook and increasing minimum wage policies. These factors are pushing farmers to increase the cost of production, thereby impacting the overall Palm Oil Market Outlook.

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Development of Sustainable Palm Supply Chain Becomes a Linchpin for Palm Oil Market Stakeholders

As the palm oil is the most widely used vegetable oil used, irresponsible practices of cultivation and processing have hampered environmental integrity in the past. To offset the damage caused and maintain future sustainability in production, palm oil stakeholders are engaged in establishing transparent and sustainable supply chain in the palm oil industry.

In addition, innovative ways are being adopted by stakeholders in the palm oil market to ensure sustainable palm oil production. For instance, Nestle has recently announced the implementation of Starling, a satellite-based service to monitor the company’s global supply chain with 100% efficiency, thereby ensuring 2020 No Deforestation commitment and sustainable palm oil supply chain. BASF, the largest manufacturer of palm kernel oil has recently revealed its plans to make available its palm oil based product portfolio and personal care specialities as certified sustainable. Unilever recently disclosed its complete palm oil supply chain including source to suppliers and has become the first consumer goods company to reveal complete transparency of the palm oil supply chain.

Amidst Sustainability Challenges, Palm Oil is Here to Stay in the Food Service Industry

Palm oil with its largest share in the global vegetable oils market has become a vital ingredient in the foodservice sector. Although the total amount of palm oil used remains untraceable till date owing to the labelling of palm oil under vegetable oil category, demand for palm oil in the food industry owing to its high saturated fatty acid content remains indispensable. Despite the presence of palm oil alternatives, easy accessibility and affordable cost of palm oil make it the most preferable choice in the foodservice industry. However, growing demand for transparency in food labelling and ongoing efforts to establish a traceable and sustainable palm supply chain is anticipated to add complexity for foodservice manufacturers operating in the palm oil marketplace.

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Growing Preference for Substitute Products to Influence Crude Palm Oil Prices

While palm oil dominates the vegetable oils market due to its intrinsic property of higher saturated fatty acid content, soybean, rapeseed, sunflower and other oils can be used as substitutes for palm oil. Although these liquid oil substitutes lack the solid fats similar to palm oil, hydrogenation of liquid oil can deliver consistency like solid fats of palm oil. Soybean and rapeseed oils that are partially or completely hydrogenated can provide consistency similar to palm oil and are considered close palm oil substitutes. In particular, affordable prices of soybean oil is becoming the close competitor of the palm oil market which is currently affected by sustainability factor.

Demand from Biofuel Sector to Prominently Impact Palm Oil Prices

As an affordable feedstock, palm oil dominates the biofuel sector, however, questions continue to arise regarding the greenness of biofuels over fossil fuels. Particularly in the case of palm oil, irresponsible farming practices have created sustainability issues. Across the global palm oil supply chain, stringent policies have significantly impacted the palm production. Recently, EU has revealed phase-out of palm oil from the transport fuel from 2021 with the intention to control irresponsible palm production practices. These factors combined with the volatility in the Brent crude prices are expected to influence the palm oil prices in the near future.

Competitive Landscape

The competitive landscape section delivers a dashboard view of the key market players in the palm oil market. In addition, users of the report can get an insightful section to read about company profiles and their relative position in the global market landscape. Few of the key market players profiled in the palm oil market report include American Vegetable Oils, Cargill Inc., Grief Inc., Fuji Oil Holdings, Bunge Limited, Associated British Foods and Ruchi Soya Industries.

The palm oil market is marked by key players engaged in adopting novel ways to increase sustainability of supply chain and expansion of palm oil production. For instance, Fuji Oil Holdings Group from Japan has partnered with a Malaysian palm oil producer United Plantation to deliver palm oil products that are complied with international standards. Bunge International, a leader in the palm oil market has recently acquired 70% of stake in IOI Loader Croklaan that provides palm oil products. Croklaan has joined Bunge’s Food & Ingredients division as Bunge Loader Croklaan. Godrej Agrovet is planning to acquire Ruchi Soya Industries and is keen to receive benefits from the Ruchi Soya’s oil palm plantation business.

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