Palm Oil Price Surge: Unraveling the Market Mysteries

Global palm oil prices have surged due to rising demand, supply disruptions from conflicts and weather, and labor shortages. Despite substitute efforts, palm oil remains vital, impacting industries and consumers worldwide. 

July 11, 2022

After the global lockdown, palm oil prices continuously increase, affecting customers' panic buying. However, the cost of edible oil was gradually growing over these years. The increase in palm oil price is directly linked with the market price of sles 70 and other chemical products. 
Numerous facts are involved in the rise of palm oil prices across the globe. In general, when a commodity cannot meet the consumers' demand, it begins to increase its price. Therefore, only the abled customers or the needy can approach the commodity. This theory also applies to this rise in palm oil prices. 
The application of palm oil is vast, as you can see the content of palm oil in soap, detergents, and other washing substitutes. Therefore, the price of soap and detergent is also linked to the price high of palm oil. Other units such as sodium Laureth sulfate are also associated with this price hike. 
The producers of soap and detergent have also increased the price of their products due to this price hike. Another critical component in soaps is sodium lauryl sulphate, which is affected due to this palm oil price hike. Therefore, you can observe a gradual price hike in cleaning soaps and detergents. 

There are mainly four reasons behind these sharp hikes in palm oil prices. These reasons are detailed here; 

Reason # 1: Demand for palm oil 
The continuously increasing demand for palm oil is essential to this price hike. The use of palm oil in the petroleum and chemical industry is enormous. With the development of the latest technology, crude palm oil is mixed with biofuels to reduce the environmental impacts. 

1. Biodiesel or renewable diesel is a component mixture of biofuels with palm oil. The demand for biofuel has increased over the years because it produces less carbon than conventional fuels. 

2. The use of palm oil in chemical products such as hand wash, detergents, and dishwashing gels has increased. 

3. Additionally, in South-East Asia, palm oils are consumed on a large scale each year. That is contributing to the primary demand for palm oil here. 

Reason # 2: Supply of palm oil 

The supply of palm oil was interrupted for many reasons, but the recent wars in North-East Europe are the primary reason for this. Apart from that, the weather of the producing estates where these trees are farming needs to consider here. 

1. As per market dynamics, the price factor of any commodity will fluctuate once the supply gets disrupted.

2. Similarly, the export barriers to the war-torn country have interrupted the smooth flow of palm oil supply. 

3. The bad weather conditions in the producing countries have also affected the supply of palm oil across the globe. 

Reason # 3: Production of palm oil

During the lockdown, the labour shortage from foreign counties in the palm oil-producing countries was observed. The production output of palm oil has been low in the last two years. Therefore, the supply was also quiet, and that has increased the price of palm oil. 

1. In the last quarter, palm oil production was steady, and the supply was smooth.

2. The impact of lockdown on production is now removed from the industry with the increase in production. 

Reason # 4: Substitutes 

Many products are mushrooming in the industry as a substitute for palm oil. Amongst them, olive oil is the main key changer. However, the need for palm oil is irreplaceable in the chemical industry. 

Therefore, these significant reasons contribute to the sudden price hike in palm oil prices. 

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