Palm Oil, Climate and Global Supply Chains

06 April 2021

Supply concerns have caused vegetable oil prices to rise sharply this year, with volatility especially high in recent weeks. Palm oil prices on the Bursa Malaysia are still trading near their 10 year highs.

Palm oil dominates the global vegetable oil market with a 60-70% share of global trade, but its lack of geographical diversification places great onus on production. Any supply disruptions in the principal producing areas of Indonesia and Malaysia can cause price reverberations across the supply chain. 

The stocks-to-use ratio for the nine major vegetable oils is the lowest since the 1990s, underlining the tightness of supplies. And with crude prices rising, the demand environment is strong. Rising vegetable oil prices will continue to be a key driver of food inflation this year, and governments may be forced to take action. 

With palm oil and soybean oil together accounting for over half of global vegetable oil production, keeping a close eye on palm oil will be vital. 

Gro will be hosting a webinar this Thursday, April 8, examining the “Connection Between Palm Oil, Climate, and Global Supply Chains,” in which we provide you with tools allowing you to assess palm oil production and supply now and in the future, along with data and models that can inform sustainability strategies. Sign up here.

 

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