WHAT IS IT?
Palm oil is a vegetable oil derived from the fruit of the oil palm tree (Elaeis guineensis). It is the world's most produced and consumed edible oil due to its high yield per hectare compared to other oilseeds.
TYPES
Crude Palm Oil (CPO): Extracted from the mesocarp (flesh) of the palm fruit. Orange-red colour. FFA content defines quality.
Refined, Bleached and Deodorised Palm Oil (RBD): Processed CPO — colourless, odourless. Used directly in food manufacturing.
Palm Kernel Oil (PKO): Extracted from the palm kernel (seed). Different fatty acid profile to CPO — more saturated, used in soap and cosmetics.
Palm Olein: The liquid fraction of RBD palm oil. Most common cooking oil in Asia.
Palm Stearin: The solid fraction. Used in margarine and shortening.
KEY USES
Cooking oil (most consumed edible oil globally)
Food manufacturing: biscuits, chocolate, instant noodles, margarine
Oleochemicals: soap, detergent, cosmetics, shampoo
Biofuel (biodiesel / HVO feedstock)
Animal feed
TRADE CORRIDORS
Major exporters: Indonesia (58% of global supply), Malaysia (26%)
Major buyers: India, China, EU, Pakistan, Bangladesh
Tetra relevance: SEA origin → East Africa growing demand for cooking oil. Also feedstock for bio-naphtha and HVO production.
PRICING
Benchmark: Bursa Malaysia Derivatives (BMD) in MYR/MT. Also priced FOB Belawan/Dumai (Indonesia) and FOB Port Klang (Malaysia).
World Bank Pink Sheet tracks monthly CPO price in USD/MT.
QUALITY PARAMETERS
Free Fatty Acid (FFA): <5% for CPO, <0.1% for RBD
Moisture and impurities (M&I): <0.5%
DOBI value (Deterioration of Bleachability Index): >2.5 preferred
IV (Iodine Value): indicates degree of unsaturation
SUSTAINABILITY
RSPO (Roundtable on Sustainable Palm Oil) certification increasingly required by European buyers. ISCC certification for biofuel applications.