Palm Oil Market Outlook
The global palm oil market size was valued at USD 44,712.0 Million in 2019 and is projected to reach USD 102,362.0 Million by 2030, expanding at a CAGR of 5.6% during the forecast period, 2020 – 2030. The expanding farming industry and the increasing use of palm oil in different fields are attributing to the market growth.
Palm oil is an edible vegetable oil obtained from the fruit of oil palm trees. Generally, two types of palm oil are produced; crude, derived from the fleshy fruit, and palm kernel, derived from the kernel or the stone of the fruit. It is a versatile oil and has many different properties and functions, which makes it a widely used oil.
Palm oil is semi-solid at room temperature. It is resistant to oxidation, which provides a long shelf-life of products. It is widely used for frying applications in the food industry, as it is stable at high temperatures, which helps it to maintain the crispy and crunchy texture of the food.
Presently, Indonesia and Malaysia are major producers of palm oil. In countries such as Asia and Africa, this oil is widely used for cooking. Major applications of palm oil are in the food & beverages industry and biofuel & energy applications.
The oil is extensively used in the cosmetics industry and personal care products. Palm oil is an important and multipurpose vegetable oil, which is used as a raw material in food and non-food industries.
Major Drivers
Increasing Preference for Organic Products Creating Growth Prospects
The growth of the global market is attributed to the expansion of the organic farming industry and growing consumer preferences for organic products. Several nations adopting organic farming by implementing regulations and standards. This significantly boosts the demand for organic food products, especially in North America and Europe, where sales of food products reached nearly 90% of total organic food consumption.
Additionally, the demand for organic food in emerging counties especially in North America and Europe is growing, thus propelling the demand for organic products such as palm oil. Moreover, increasing demand is encouraging retailers to make organic food products available in conventional stores.
Two big supermarkets, Woolworths and Coles, are now selling a broad variety of organic products, thus improving the convenience of buyers. Thus, driving the growth of the global palm oil market during the forecast period.
Palm Oil Replacing Less Healthy Fats in Foods Products
The demand for palm oil is growing steadily as it is being utilized in a wide range of food products made available on supermarket shelves. Palm oil is odorless and high in yield; therefore, it is a majorly consumed vegetable oil worldwide. Palm oil is used in a large number of food and consumer goods akin to corn and soybeans.
Additionally, rising consumer usage of the oil and recent mandates for biodiesel worldwide propel the demand for palm oil. This oil is the main ingredient in nearly 50% of all processed food products, as it offers various health benefits such as improved metabolism, decreased risk of cancer & cardiovascular disease, and the ability to slow down degenerative neurological diseases.
Existing Restraints
Government Measures to Curb Palm Oil Production Due to Carbon Emissions
Expanding palm plantations requires clearing large swaths of rainforest, which results in long-term environmental damage. Palm oil has been and continues to be a significant cause of deforestation in some of the world's most biodiverse forests, destroying habitats for endangered species such as Pygmy Elephant, Orangutan, and Sumatran Rhino.
This forest destruction, combined with the conversion of carbon-rich peat soils, causes the emission of large quantities of greenhouse gases into the atmosphere and leads to climate changes; therefore, several governments are compelling players to follow a private sustainable approach for palm oil production. This, in turn, has caused several problems for small- and medium-sized players.
Palm Oil Prices Higher than those of Refined Oils and Volatility in Prices
Oil palm has much lower production costs per ton of oil than annual oilseeds such as soya, rapeseed, and sunflower. Soybean processors benefited from high credits from the selling of their food production. Large palm oil producers estimate all planting costs from tree planting to replacement to monitor yearly variability on the basis of tree age and weather.
Moreover, high costs associated with the production and processing of palm oil are anticipated to hamper the market during the forecast period. Additionally, volatility in prices of agricultural commodities is expected to hinder the production of palm kernels, resulting in price fluctuations of palm oil and related products.
Emerging Opportunities
Increasing Use of Palm Oil as Vegetable Oil and Biodiesel
Rising demand for vegetable oils is expected to create lucrative opportunities for the market players. With the increasing population growth, there is a huge demand for vegetable oils including palm oil, which is essentially used as a food product, biofuels, and cosmetics.
For instance, on August 18, 2021, The Government of India launched the National Mission on Edible Oils – Oil Palm to decrease the dependency on edible oil and start using palm oil in households.
Furthermore, palm oil is increasingly used as a biofuel, for instance, on February 3, 2023, the government of Indonesia launched B35, a high-blend palm oil-based biodiesel. It has 35% palm oil content to lessen the use of imported diesel. Thus, the increasing use of this oil in developing countries is expected to create opportunities for key market players.
Palm Oil Market Segment Insights
Product Type Segment Analysis
On the basis of product type, the palm oil market is segmented into organic and conventional. The organic segment is expected to hold a significant market share and is projected to expand at a substantial CAGR during the forecast period. Rising use of organic palm oil for household and commercial cooking applications such as frying and manufacturing of baked goods and snack foods is anticipated to propel the segment growth.
Form Segment Analysis
On the basis of form, the palm oil market is segmented into crude palm oil, RBD palm oil, palm kernel oil, and fractionated palm oil. The crude palm oil segment is expected to hold a significant market share, while the palm kernel oil segment is projected to expand at a considerable CAGR during the forecast period.
Crude oil is a cold-pressed oil derived from the reddish pulp of palm trees. It is a widely used oil for cooking applications. Refined, bleached, and deodorized (RBD) palm oil is widely used for frying applications and manufacturing of margarine, vanaspati, and ice creams; whereas, palm kernel oil is suitable for commercial cooking applications. These are some of the factors, which contribute to the growth of the segment.
End-user Segment Analysis
Based on end-user, the palm oil market is divided into food & beverage, personal care & cosmetics, biofuel & energy, pharmaceutical, and industrial. The biofuel & energy segment is expected to hold a significant market share, while the food & beverage segment is projected to expand at a substantial CAGR during the forecast period.
Increasing usage of palm oil in the food and beverages industry is a major factor propelling the market during the forecast period. Moreover, growing awareness among consumers regarding the positive health benefits of palm oil encourages end-use industries to use it in their products.
Regional Analysis
In terms of region, the global Palm Oil market is fragmented into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa. Asia Pacific constituted one-third share in 2020. The market in the Asia Pacific is projected to expand at a CAGR of 5.7% during the forecast period.
The presence of key manufacturers in the region is one of the factors, which constitutes a significant share of the market. Rising adoption of palm oil in the food and beverage industry has led to a rise in the export of palm oil from the region. This is one of the factors, which constitutes the growth of the market in Asia Pacific.
Key Benefits for Industry Participants & Stakeholders
- In-depth Analysis of the Global Palm Oil Market
- Historical, Current and Projected Market Size in terms of Value
- Potential & Niche Segments and Regions Exhibiting Promising Growth Covered
- Industry Drivers, Restraints and Opportunities Covered in the Study
- Recent Industry Trends and Developments
- Competitive Landscape & Strategies of Key Players
- Neutral Perspective on Global Palm Oil Market Performance
Segments
Type
Form
- Crude palm Oil
- RBD Palm Oil
- Palm Kernel Oil
- Fractionated Palm Oil
End-User
- Food and Beverage
- Personal Care and Cosmetics
- Biofuel and Energy
- Pharmaceutical
- Industrial
Region
- North America
- Latin America
- Brazil
- Mexico
- Colombia
- Rest of Latin America
- Europe
- Belgium
- France
- Germany
- Italy
- Spain
- Russia
- Rest of the Europe
- Asia Pacific
- Indonesia
- India
- China
- Malaysia
- Pakistan
- Thailand
- Rest of Asia Pacific
- Middle East & Africa (MEA)
- Nigeria
- Egypt
- Kenya
- Ghana
- Rest of MEA
Key Players
- Wilmar International Ltd
- IOI Corporation Berhad
- Sime Darby
- Kuala Lumpur Kepong Berhad
- United Plantation Berhad
- FGV Holdings Berhad
- PT PP London Sumatra Indonesia TbK
- SOCFIN Group
- QL Resources Berhad
- Bumitama Agri Limited
- PT Salim Ivomas Pratama Tbk (SIMP)
- Genting Plantations Berhad
- TSH Resources Berhad
- SIPEF NV
- BELEM BIOENERGIA BRASIL
Competitive Landscape
Key players in the market include Wilmar International Ltd, IOI Corporation Berhad, Golden Agri-Resources Ltd., Sime Darby Berhad, Kuala Lumpur Kepong Berhad, United Plantation Berhad, PT PP London Sumatra, Socfin Group, QL Resources Berhad, Bumitara Agri Limited, PT Salim Ivomas Pratama Tbk (SIMP), PT. Mahkota Group, Tbk, Genting Coporation Bernard, FGV Holdings Berhad, and TSH Resources Berhad. These companies are considered manufacturers of the palm oil market based on their revenue, regional presence, and supply chain management system.
The players are adopting key strategies such as product development, geographical expansion, mergers and acquisition, and many other strategies to increase their demand for palm oil.
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For instance, In December 2019, Wilmar International Ltd acquired Wilmar International Ltd to expand its presence in Australia, New Zealand, Papua New Guinea, and the Pacific Islands.