Palm oil has lost its position as the cheapest cooking oil in the world

By: Trademagazin Date: 2024. 09. 26. 11:45

Palm oil has lost its position as the world’s cheapest edible oil as production declines and an abundance of alternative vegetable oils have reshuffled the market. It was once considered the cheapest oil, but nowadays it is sold more expensively than soybean oil, whose price difference in 2022 was still $782 per ton in favor of palm oil.

The popularity of palm oil stems from the fact that it can be harvested all year round and requires less land to grow than, for example, soybeans or sunflowers. However, the palm plantations of Indonesia and Malaysia, which provide 85 percent of the global palm oil supply, are facing serious challenges. Small growers are reluctant to cut down their old trees, as new trees take four to five years to bear fruit, while soybeans only take six months. As a result, palm oil prices rose by 10 percent this year, while soybean prices fell by 9 percent.

While the rising price of palm oil is a cause for concern, the biggest users, such as Indian cake makers and restaurants, are unlikely to look for substitutes quickly. The widespread use of palm oil in food production and as a biofuel makes it difficult to substitute. However, the market reacts sensitively to seasonal factors: at low temperatures, palm oil solidifies, which reduces demand in the largest importing countries, such as India. If Indian demand declines and Southeast Asian production does not reach the expected level, palm oil may lose market share to soybean and sunflower oil.
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