|
|
|
Commodity |
| CRUDE PALM OIL |
 |
| Description | Overview |
History |
Palm oil producing
countries | Indian palm oil market |
Major trading centers |
| Description |
Palm oil is a fatty edible vegetable oil, yellowish in color,
derived from the flesh and the kernel of the fruit of the oil palm
tree. The oil palm tree is a tropical, single stemmed tree having
feather like leaves that gains a height of around 20 meters. The
fruits of this tree, that are also the sources of the palm oil
grow in bunches, are reddish in color, bigger than plums in size
and have a single seeded kernel inside. The oil palm tree is
native to the areas of coastal Africa and appears different from a
coconut palm tree.
Palm oil is used in the manufacturing of
soaps, ointments, cosmetics, detergents, and lubricants and also
as cooking oil. Commercially palm oil is used in various forms
such as crude palm oil, crude palmolien, refined bleached
deodorized (RBD) palm oil, RBD palmolien and palm kernel oil.
|
|
Overview |
Palm
oil is basically an edible oil and almost 90% of the world
production is used in for this purpose. The rest 10% of production
accounts to the industrial uses. It is used as a substitute for
cocoa butter and butter flat. This oil has a unique feature of
remaining stable in a good range of temperatures and is often use
to fry foods. Also, palm wine is made from tapping and fermenting
the palm oil and it is very popular in the western African region.
The combined world production effort of palm oil sums up to
around 35 million tons with Malaysia topping the production charts
with around half of the production being done there. Indonesia and
Nigeria follow Malaysia at the second and third rank. The
production figure of palm oil makes it the second largest
vegetable edible oil produced around the globe after soy oil. The
production trend of palm oil has been up in the past few years
accompanied by the consumption trend as well. An estimate of the
per capita consumption of palm oil in the world is 9 pounds per
year with the total consumption figure of around 33 million tons.
China is the maximum palm oil consuming country of the world. The
major consuming countries of palm oil in the world with their
respective consumption figures pertaining to the year 2004-05 are
- China (4.3 million tons)
- Indonesia (4.1 million tons)
- European Union (3.8 million tons)
- India (3.7 million tons)
- Malaysia (2.6 million tons)
- Pakistan (1.4 million tons)
- Nigeria (0.9 million tons)
- Bangladesh (0.75 million tons)
- Thailand (0.7 million tons)
- Egypt (0.6 million tons)
The trade figures of palm oil make it
incomparable to other vegetable oil traded round the globe.
Approximately 80% of the world palm oil production (24 million
tons) gets exported to the importing countries and this fact makes
it the leading exported vegetable oil. The largest exporter of
this oil is its largest producer, Malaysia, followed by Indonesia
with the exports of around 12.5 million tons and 9.5 million tons
respectively. These countries contribute to over 90% of the palm
oil exported in a year. The export trend has also risen during the
past few years. The other exporters of this oil are Papua New
Guinea, Colombia, Sri Lanka, Singapore, Jordan, Thailand, European
Union and United Arab Emirates.
The import figures of palm oil hover around
24 million tons like the export figure. China leads the importing
list given below that also states the import figures individually
-
China (4.3 million tons)
-
European Union (3.9 million tons)
-
India (3.7 million tons)
-
Pakistan (1.5 million tons)
-
Bangladesh (0.7 million tons)
-
Egypt (0.6 million tons)
-
Russia (0.5 million tons)
-
Turkey (0.4 million tons)
- Malaysia (0.3 million tons)
|
|
History
|
The history of oil palm tree starts from
the western coast if Africa where it marked its
origination. It is believed that it originated
in the coastal area as it is considered to be of
riparian species i.e. species that is not able
to grow in shades but can tolerate flooding
conditions. The western coast of Africa extends
towards east from Sierra Leone to areas of Congo
and this was the region where it was
domesticated by the native people probably in
Nigeria. With the help of the people who made
agricultural shifts around 5000 years ago, the
plantation spread throughout Africa. It also
played an important role as a food plantation in
the time of ‘Pharos’.
When the Europeans reached
Africa to explore the continent in around the
15th century, they discovered palm tree and that
was the time the rest of the world got
introduced with it. The cultivation of palm
spread throughout the world and in the 19th
century palm oil began to trade. As late as in
the 20th century, oil palm tree was introduced
into Malaysia and palm oil started to get
produced commercially in 1917. With time
Malaysia developed as a dominant player in the
world scenario and is currently the largest
producer of palm oil in the world.
|
| Cultivation
pattern
|
|
Oil palm trees are generally grown in the
tropical (hot and humid) conditions. The
plantation belongs to the riparian species that
can survive in flood conditions and a high water
table. It can be cultivated on a various types
of soil but the basic factor that supports the
growth is the drainage and water content present
in the soil. The plantation requires a
well-drained soil and if it is not provided like
in the sandy or clayey soil, the yield of the
crop is affected adversely. The propagation of
the tree is done with the help of its seed after
providing proper treatment as the germination
can get affected if the seeds are not treated.
The tree produces a
little or no fruit in the first three years. But
after this time, the tree begins to produce
fruits, which are harvested when they become
ripen. Various tools are used to harvest the oil
palm fruits such as chisel or hooked knives
attached to long poles and some times, also by
climbing on the tree directly. The fruits are
obtained from the tree until it gets around 30
feet long as harvesting fruits from such a tall
tree gets very difficult. That why the tree is
injected with a herbicide to kill it or it is
bulldozed down.
|
|
|
| Palm
oil producing countries |
Palm oil is derived from the oil palm tree, which
is cultivated in over 42 countries of the world
and is largely used as an edible cooking oil. Palm
oil production in the world accounts up to around
35 million tons, it being at the second place
regarding the edible vegetable oil production. The
major producer countries of palm oil in the world
along with their production figures pertaining to
the year 2004-2005 are
- Malaysia (15 million tons)
- Indonesia (14 million tons)
- Nigeria (0.8 million tons)
- Thailand (0.7 million tons)
- Colombia (0.65 million tons)
- Papua New Guinea (0.38 million tons)
- Cote d’Ivoire (0.34 million tons)
- Ecuador (0.3 million tons)
- Costa Rica (0.24 million tons)
- Congo (0.2 million tons)
Malaysia is the largest
producer of palm oil in the world with
approximately 43% contribution in the world’s
production. Indonesia has been the closest
competitor to the leader country in this
production context. It contributes to
approximately 40% in the world figures. The world
production has increased with time and is still
rising @ 7%. The same is the case with the area
covered under the cultivation of oil palm tree.
This crop is cultivated in around 28 million acres
of land over the world.
Production of
palm oil in India
India holds a very small
share of palm oil production in the world figures.
It hardly contributes to the world production and
is not able to satisfy its domestic consumption
demand. It produces a mere 70000 tons of palm oil
annually i.e. just 0.2% share in the total
world’s produce. The state having the maximum
production of palm oil in India is Kerala as it
produces 20000 tons per year. Kerala, cultivating
oil palm trees on around 12000 hectares of land,
also hold the maximum acreage with 10000 hectares
pertaining to a public sector enterprise namely
Oil Palms India Ltd and the rest pertaining to the
private sector. Godrej is the maximum oil palm
plantation company in India producing over 20000
tons per year. India has been looking forward to
increase its production a bit more to push it up
to 3 lakh tons in the year 2015 to 2020.
|
| Indian
palm oil market
|
India is basically a net importer of the palm oil. It
never had a production history in context of this oil.
But it does have a vast palm oil consumption and
import background. India produces around 70000 tons of
palm oil annually which stands at approximately 0.2%
share in the worlds total production. Kerala is the
largest palm producing state in India with 30% share
in the total production figures of the country. Among
the companies indulged in the production of palm oil,
Godrej emerges as a leader with the same amount of
production as Kerala.
Indian palm oil consumption
hovers around 3.7 million tons, which is a much bigger
quantity as compared to the production figure. The
country ranks 4th regarding its consumption level. It
is not capable of fulfilling the domestic consumption
demand and that is why it has to rely on imports of
the oil. The major demand of palm oil arises from the
food and cooking oil industries.
After China and European union,
India is the third largest importer of vegetable oils.
Palm oil contributes to around 48% of the total edible
oils that are imported in the country. The country’s
imports of palm oil reach up to 3.7 million tons that
is same as the consumption figure. This means that
most of the country’s demand is heavily dependent
upon the country’s import. Palm oil imports in the
country are controlled with the help of high import
duties imposed by the government. The countries from
which palm oil is imported are Malaysia and Indonesia.
The Indian palm oil market is largely organized and is
in the hands large refining companies.
Market Influencing Factors
- World demand and supply fluctuations of the
competitive edible oils
- Domestic demand and supply fluctuations of other
oils and oilseeds
- Seasonal cycles, as April to December is the
peak production period
- Import policies of the importing nations
|
|
| Major
trading centers of palm oil |
The major crude palm oil markets in the world are
- Bursa Malaysian Derivatives (BMD) –
largest futures market for crude palm oil
- Indonesia
Crude palm oil markets in
India are
Crude palm oil is also traded
at the Indian commodity exchanges like National
Commodity & Derivatives Exchange ltd, Multi
Commodity Exchange of India ltd and National
Multi Commodity Exchange Ltd.
|
|
|
|
|
|
|
|
