Global: Palm oil is no longer the cheapest, jeopardizing its dominant market share

Published Nov 26, 2024

Tridge summary

Palm oil, once the most affordable vegetable oil, has become more expensive than soybean oil due to production challenges in Malaysia and Indonesia and increased use in biofuels. This price shift forces food and cosmetics manufacturers to decide whether to absorb the costs, pass them to consumers, or switch to alternatives like soybean oil, which some Brazilian companies have already done. However, switching may impact product quality due to flavor differences. While global soybean harvests, especially in Brazil, are expected to be plentiful, palm oil demand is at a three-year low, hindered by aging trees and strict European anti-deforestation policies.

Disclaimer:The above summary was generated by Tridge's proprietary AI model for informational purposes.

Original content

Palm oil’s reputation as an affordable and abundant crop makes it ubiquitous on store shelves as part of products ranging from cookies to cosmetics, but rising prices are threatening that dominance, Bloomberg analysts said. Unlike soybeans, sunflowers and canola, palm oil is harvested year-round and requires less land to grow, which means it’s usually cheaper. However, the tropical commodity has ceded its status as the world’s cheapest vegetable oil to soybean oil this year when prices surged amid concerns over production curbs in Malaysia and Indonesia, as well as plans to shift more of its supply to biofuels. If the premium to palm oil persists, bakery and cosmetics makers will have to make tough decisions: absorb the higher cost, pass it on to consumers, or change their recipes with less expensive alternatives. As the agency notes, some Brazilian manufacturers have already started using soybean oil as a substitute for palm oil. Cosmetics companies use palm oil as a skin ...

Source: UkrAgroConsult