Top Facts You Didn’t Know About Palm Oil market & Impact of COVID-19

Posted by Mrudula Karmarkar on September 22nd, 2022

The global palm oil market size is expected to reach USD 98.9 billion by 2030, as per the new report by Grand View Research, Inc. It is expected to expand at a CAGR of 5.1% from 2022 to 2030. The growth is driven by increasing demand for food applications and eco-friendly, organic, and sustainable products. Personal care products and cosmetic industries are also major sectors accountable for the growth of product.

Palm oil is an edible oil that is derived from the mesocarp of the palm fruit. Indonesia and Malaysia are the largest producers as well as exporters of the product globally. It is extensively used in food, cosmetic, and personal care products industries among others. Asia-Pacific region is the largest consumer of palm oil owing to its key application for food preparation in the region.

The global product market is amalgamated as well as competitive in nature. It is one of the well-established with a developed value chain. Internationally the product market has a presence of a resilient network of distributors, traders, and strong relationships with manufacturers. The overall market is considered to have an extremely cohesive supply chain and increasing demand for the product for an expansive range of end-use applications comprising biodiesel, food & beverages, and personal care & cosmetics, among others.

Fractionated palm oil product segment appeared to be the largest segment in the international market accounting for the highest share in 2021 of the global revenue of the market. This segment is the most popular due to its easy economic availability worldwide and manufacturing ease owing to the 50% unsaturated and 50% fatty acid constituent nature of palm oil. The segment is expected to expand during the forecast period owing to its extensive utilization by the people. The market is driven by exponentially growing demand from the food, beverage, biofuel, energy, personal care, and cosmetics industries.

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Major manufacturers are in the Asia Pacific region due to the ease of availability of raw materials in the region. The market is highly competitive as well as comprehensive in nature owing to the presence of a large number of all-scale players who try to gain a competitive edge over others with their high production, superior distribution networks, product quality, and various competitive strategies.

Indonesia is the largest palm oil producer as well as exporter of the same. The country exports the product globally. The government also supports the cultivators of palm oil plants. It is a major source of income for many small and medium-scale producers in the region. The industry is majorly responsible for the development and upliftment of the cultivators in the region.

Palm Oil Market Report Highlights

• Asia Pacific region witnessed the fastest growth rate globally with a CAGR of 5.3% in terms of revenue for the forecast period. This is attributable to increasing palm oil demand from India and China, experiencing a rapid increase in population, and changing demographic trends
• The biofuel and energy end-use segment is expected to expand rapidly with a CAGR of 5.3% in terms of revenue from 2022 to 2030. This is owed to the increasing consumption of palm oil to produce biofuel which is expanding its product portfolio through advancement in technology by research and development
• The organic nature segment is anticipated to have proliferated growth rate with a CAGR of 11.6% in terms of revenue during the forecast period. This is increasing awareness about the benefits of using organic products and increase in the health consciousness of the people
• The market is consolidated as well as competitive in nature with the existence of major players including ADM, Wilmar International Ltd., as well as small players thriving for a significant piece of share
• These companies use various competitive strategies like product diversification, capacity expansion, investing in research and developmental activities, mergers, and acquisitions to gain a competitive edge over the other players

Similarly, the product has witnessed an increasing demand from the biofuel industry. It is used in the production of biofuel which is further used as a sustainable alternative to crude oil in many applications such as engine oil. The biofuel industry is a budding industry with limited applications for now.

Although the industry is expected to attain development as many players are involved in the research and development of the industry. As the industry will gain ground the demand for palm oiland the market is expected to increase and drive the product market.

The global palm oil market is consolidated and highly competitive. The prices of the product in the international market are highly volatile and are affected by international crude oil prices. The market has the presence of multinational companies such as ADM and Wilmar International Ltd. which make the market more competitive. Major players have acquired plantations or contracts with the cultivators to ensure a constant supply of raw materials. Volatility in the prices of the raw material adversely affects the profitability of the product. Some prominent players in the global palm oil market include:

• ADM
• Wilmar International Ltd.
• Sime Darby Plantation Berhad
• IOI Corporation Berhad
• Kuala Lumpur Kepong Berhad
• United Plantations Berhad
• Kulim (Malaysia) Berhad
• IJM Corporation Berhad
• PT Sampoerna Agro, Tbk
• Univanich Palm Oil Public Company Ltd.
• PT. Bakrie Sumatera Plantations tbk
• Asian Agri