Climate and Farming Impact – (2024)
Unpredictable weather patterns—including prolonged dry periods in Indonesia and excessive rains in Malaysia—negatively affected palm fruit yields and oil extraction rates. This coincided with rising global demand for edible oils and stronger biodiesel mandates in producing nations. Meanwhile, increasing enforcement of sustainability certifications and deforestation-free supply chain regulations in the EU and North America introduced new compliance costs, tightening export margins and further influencing price dynamics.
Feedstock & Logistic Disruptions – (2023)
Southeast Asia faced heavy rainfall and flooding, which hindered harvesting activities and transportation. Logistics challenges such as freight rate spikes, container shortages, and port delays intensified the disruption. Export restrictions and fluctuating stock levels in key destinations led to intermittent supply gaps and contributed to volatile price behaviour in the international Palm oil market.
Russia-Ukraine War – (2022)
The war significantly disrupted the global sunflower and canola oil supply chains, prompting a global shift toward alternative oils like palm oil. As one of the most accessible and affordable options, Palm oil experienced a sharp rise in demand, especially in the food processing and refining sectors. Simultaneously, rising fertilizer, energy, and freight costs inflated upstream production expenses, driving Palm oil prices to multi-year highs.
Post-COVID Demand Recovery – (2021)
As global economies began to reopen, demand for crude palm oil rebounded, particularly in India, China, and Africa, where palm oil is a staple in edible oil consumption. However, the production recovery lagged due to persistent labour shortages and pandemic-era restrictions, leading to tight supplies and escalating prices. Increased interest in biodiesel blending mandates in Southeast Asia also added upward pressure on Palm oil prices.
The COVID-19 Pandemic – (2020)
Global lockdowns severely disrupted the palm oil supply chain, from plantation labour availability to milling and export operations. In major producing countries like Indonesia and Malaysia, labour shortages, transport restrictions, and port closures caused harvest backlogs and lower processing volumes. Simultaneously, reduced demand from food service, hospitality, and biofuel sectors led to rising inventories and significant price volatility in the global vegetable oil market.
