Palm oil is primarily a variant of
vegetable oil that is derived from the mesocarp of the fruit of the oil palms.
Being a saturated type, this oil provides several advantages that makes it one
of the most preferred vegetable oils among consumers. Multiple studies have
confirmed that palm oil has the power to reduce stress, boost brain health,
fight heart diseases, improve skin health and increase Vitamin A in the body.
Hence, palm oil undoubtedly enjoys a high position among health-conscious
people around the globe.
The countries situated in the tropical
belt are the primary producers of palm oil. However, not all countries are able
to produce it as the plantation of the same requires certain specifications
regarding climate conditions. Malaysia and Indonesia are the two major
producers of palm oil in the eastern part of the world. The production scores
so high that both countries have the capacity to export to the other parts of
The determinants of the price component
The price of palm oil has a direct
connection with the economic and trade dimension of the world. Some of the
vital factors that decide the price of palm oil are - productions with respect
to supplies, the exchange rate movements, the number of exports and the volume
of business in a year. According to the statistics, the last three years have
seen a steady pace in palm oil prices. However, the forecasts say that the
prices are expected to show a better and moderate pace during the year 2019. The
lower production levels, uncongenial weather conditions and withering
plantations have been the primary reasons for the low palm oil prices in the
Malaysian market. Contrary to this, the Indonesian palm oil prices have managed
to maintain a steady pace so far.
Positive aspects that are expected to stabilize the prices
It has been firmly stated in many
market predictions that as India is suffering from a lowered level of oilseed
production, the demand for importing the seeds will be higher in the coming
years. This will surely help in pegging up the prices of palm oil. India is one
of the major importers of palm oil from Malaysia and the demand is anticipated
to inevitably increase in the year 2019. India, with an expectation to increase
its oilseed import by 15.15 million tons in 2019, will account for 10 million
tons for palm oil only.
Though the demand has already been
assured, the supply chain needs confirmation as well. Malaysia is expected to
register a growth in the production level of palm oil. Since the new plants are
maturing, the overall production is sure to experience a boost. Though there is
always a bunch of old and withering plants involved that eats up the bandwidth
of production potential nonetheless, the net production is still expected to
rise. Accounts show that the output is expected to rise by approximately 2
million tons, thereby increasing the export volume by 0.5 million tons.
Although the prices of palm oil has been wavering in
the last three years, with a favorable weather condition and fast maturing
plantations, they are expected to show a recovery in the year 2019.