GLIMPSE OF INDIAN PALM OIL MARKET

Indian Palm oil market

Palm oil is a fatty edible vegetable oil, yellowish in color, derived from the flesh and the kernel of the fruit of the oil palm tree. The oil palm tree is a tropical, single stemmed tree having feather like leaves that gains a height of around 20 meters. The fruits of this tree, that are also the sources of the palm oil grow in bunches, are reddish in color, bigger than plums in size and have a single seeded kernel inside. The oil palm tree is native to the areas of coastal Africa and appears different from a coconut palm tree.

Palm oil is used in the manufacturing of soaps, ointments, cosmetics, detergents, and lubricants and also as cooking oil. Commercially palm oil is used in various forms such as crude palm oil, crude palmolien, refined bleached deodorized (RBD) palm oil, RBD palmolien and palm kernel oil.

India is basically a net importer of the palm oil. It never had a production history in context of this oil. But it does have a vast palm oil consumption and import background.  India produces around 70000 tons of palm oil annually which stands at approximately 0.2% share in the worlds total production. Kerala is the largest palm producing state in India with 30% share in the total production figures of the country. Among the companies indulged in the production of palm oil, Godrej emerges as a leader with the same amount of production as Kerala. Indian palm oil consumption hovers around 3.7 million tons, which is a much bigger quantity as compared to the production figure. The country ranks 4th regarding its consumption level. It is not capable of fulfilling the domestic consumption demand and that is why it has to rely on imports of the oil. The major demand of palm oil arises from the food and cooking oil industries. After China and European union, India is the third largest importer of vegetable oils. Palm oil contributes to around 48% of the total edible oils that are imported in the country. The country’s imports of palm oil reach up to 3.7 million tons that is same as the consumption figure. This means that most of the country’s demand is heavily dependent upon the country’s import. Palm oil imports in the country are controlled with the help of high import duties imposed by the government. The countries from which palm oil is imported are Malaysia and Indonesia. The Indian palm oil market is largely organized and is in the hands large refining companies. Market Influencing Factors World demand and supply fluctuations of the competitive edible oils Domestic demand and supply fluctuations of other oils and oilseeds Seasonal cycles, as April to December is the peak production period Import policies of the importing nations
The major crude palm oil markets in the world are Bursa Malaysian Derivatives (BMD) – largest futures market for crude palm oil Indonesia Crude palm oil markets in India Kandla (Gujarat) Mumbai (Maharashtra) Kakinada (Andhra Pradesh) Chennai (Tamil Nadu) Vijaywada (Andhra Pradesh) Haldia (West Bengal) Indore (Madhya Pradesh) Crude palm oil is also traded at the Indian commodity exchanges like National Commodity & Derivatives Exchange ltd, Multi Commodity Exchange of India ltd and National Multi Commodity Exchange Ltd.