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Crude Palm Oil
By 1870. Palm oil became a highly adored commodity by British traders. Boiling it for a few minutes destroys the carotenoids and the oil becomes colourless. The plant thrived best in the Far Eastern countries and provided the largest commercial production base by removing its importance from centre of origin.25 hectares to produce one tonne of oil while soybean. History The oil palm tree was discovered thousands of years back in Western Africa. In Malaysia. The trunks of young and adult plants are wrapped in fronds which give them a rough appearance. But its importance as an edible oil remained rare outside West Africa mainly because of its bulkiness and cheaper source of oil compared to others. The first plantations were mostly established and operated by British plantation owners. Palm oil itself is reddish because it contains a high amount of beta-carotene. palm oil constituted the primary export of some West African countries such as Ghana and Nigeria. The oil extracted is highly coloured and flavoured. It is used as cooking oil. The traditional process of processing is simple. The oil palm gives the highest yield of oil per unit area . the oil being used as industrial lubricant for the machines of Britain's ongoing Industrial Revolution.15. The tenera variety yields about 4 to 5 tonnes of crude palm oil (CPO) per hectare per year and about 1 tonne of palm kernels. Palm trees may grow up to sixty feet and more in height. 1. to make margarine and is a component of many processed foods. The oil palm is most efficient. sunflower and rapeseed need 2. European merchants having trade with West Africa purchased palm oil occasionally for use in Europe.50 and 0. the trees planted are mainly the tenera variety. It was introduced to Java by the Dutch in 1848 and Malaysia (then the British colony of Malaya) in 1910 by Scotsman William Sime and English banker Henry Darby.Oil Palm is one of the commercially cultivated oilseeds having its origin from West Africa where it was cultivated as wild and later developed into a commercial crop. The extensive development of oil palm industries in many countries in the tropics has been motivated by its extremely high potential productivity. The older trees have smoother trunks apart from the scars left by the fronds which have withered and fallen off. A normal oil palm tree will start bearing fruits after 30 months of planting and will continue to be productive for the next 20 to 30 years thus ensuring a consistent supply of oil. a hybrid between the dura and pisifera. Each ripe bunch is commonly known as Fresh Fruit Bunch (FFB). such as Sime Darby. The palm fruit is the source of both palm oil (extracted from palm fruit) and palm kernel oil (extracted from the fruit seeds).75 hectares respectively. Processing of oil palm for edible oil has been in practice in Western Africa for thousands of years. requiring only 0. but tedious and inefficient. as well as forming the basis for different brands of soap. Palm oil is one of the few vegetable oils relatively high in saturated fats (like coconut oil) and thus semi-solid at room temperature. is an essential ingredient in most of the tradition West African cuisine. During the 14 th to 17th centuries some palm fruits were taken to the America and from there to the Far East. From the 1960s a major oil palm plantation scheme was introduced by the government with the main aim of eradicating poverty.
Sanitation and hygiene among Europeans created additional demand for soaps resulting in the demand for vegetable oils suitable for soap manufacture. The palm tree bears fruit in bunches varying in weight from 10 to 40 kg. The Palm oil is rich source of carotenoids. from which it derives its deep red colour. Importance The oil palm is now grown as a plantation crop in most of the countries receiving minimum rainfall of 1600 mm/year because of its economic importance and high yielding source of edible oil. it looks like a viscous semisolid at tropical climate and a solid fat in temperate climates.compared to any other crop and produces two distinct oils–palm oil and palm kernel oil– both of which are important in world trade. which also contains oil. about 50% and 80%. The major component of its glycerides is the saturated fatty acid palmitic. Presence of palmitic fatty acid. Industrial revolution in Europe has resulted into establishment of international trade in palm oil especially from West Africa. Central nut consists of a shell known as endocarp and the kernel. . part of the vitamin E family and also high in vitamin K and dietary magnesium. The export of palm kernels also began in 1832 and by 1911 British West Africa alone exported 157 000 tons of which about 75 percent came from Nigeria. After abolition of slave trade. Malaysia and Indonesia surpassed Africa’s total palm oil production. palm oil has become principal cargo of slave ships. Africa led the world in production and export of palm oil throughout the first half of the 20th century. It is the largest natural source of tocotrienol. the pigment found in plants and animals. Nigeria was the largest exporter until 1934 when the country was surpassed by Malaysia. Chemical Composition & Uses The Palm Oil and Palm Kernel oil are composed of fatty acids esterified with glycerol. led by Nigeria and Zaire. monounsaturated oleic acid is also a constituent of palm oil while palm kernel oil contains mainly lauric acid. Each fruit ranging from 6 to 20 gm is made up of an outer skin called as exocarp. Ideal composition of palm fruit bunch Bunch weight Fruit/bunch Oil/bunch Kernel/bunch Mesocarp/bunch Mesocarp/fruit Kernel/fruit Shell/fruit 23-27 kg 60-65 % 21-23 % 5-7 % 44-46 % 71-76 % 21-22 10-11 Early Trade in Palm World trade in palm oil started at the turn of nineteenth century while palm kernel trade begun after 1832. By 1966. respectively. The oil palm gives its name to the 16 carbon saturated fatty acid palmitic acid found in palm oil. a pulp called mesocarp contain the palm oil in a fibrous form. Both are high in saturated fatty acids.
heating (cooking). Conversion of crude palm oil to refined oil involves removal of the products of hydrolysis and oxidation. rapeseed. and filtering). cottonseed. corn. the oil may be separated (fractionated) into liquid and solid phases by thermo-mechanical means (controlled cooling. about 1 tone of palm kernel oil is also obtained. competing successfully with the more expensive groundnut. The crude palm oil may be further refined (second stage of processing) to get a wide range of palm products of specified quality. crystallization.Sterilization in Large Pressure Vessel/Cages FFB Enters the Plant for Processing Stripping in Rotating Drum “Stripper” Extraction in Homogeneous Oil Mash Processing A unique feature of the oil palm is that it produces two types of oil palm oil from the flesh of the fruit. and the liquid fraction (olein) is used extensively as a liquid cooking oil in tropical climates. The first step in processing is at the mill. with large numbers of international manufacturers able to offer equipment that can process from 10 kg to several tonnes per hour. Extraction is a well-established industry. For every 10 tons of palm oil. The various steps in extraction are shown in the Flow Chart. and will often be carried out in mills that process other oilseeds (such as groundnuts. After refining. and extracting the oil using an oilseed expeller or petroleum-derived solvent. colour and flavour. and copra). The stages in this process comprise grinding the kernels into small particles. Extraction of oil from the palm kernels is generally separate from palm oil extraction. where the crude palm oil is extracted from the fruit. The partly CPO Purification in a Continuous Clarification Tank Refining Process Alkali Refining Physical Refining Degummi ng & Pre Bleaching Deacidifati on & Deodorizat ion RBD Palmolein Alkali Neutraliz ation Earth Bleachi ng Deodoriz ation . and palm kernel oil from the seed or kernel. and sunflower oils. The oil then requires clarification in a filter press or by sedimentation. Several processing operations are used to produce the finished palm oil that meets the users' requirements.
Palm oil is also a primary substitute for rapeseed oil in Europe. In short. regardless of these new innovations. 250kg of palm kernel press cake. become available: around 6 tons of waste palm fronds. a palm plantation has the potential to yield a very large amount of biomass that can be used for the production of renewable products. fuels and biodegradable products. buying others out and forming alliances in order to obtain the economies of scale needed to handle the high costs caused by increased feedstock prices. the following residues. However. In Malaysia companies have been merging. palm oil starts bearing fruits from 30 months after its planting and continues to yield till 20-30 years. both the energy balance and the greenhouse gas emissions balance for biodiesel from palm oil is improved. Therefore. 5 tons of empty fruit bunches (EFB). like other vegetable oils. first generation biodiesel production from palm oil is still in demand globally and will continue to increase. can be used to create biodiesel for internal combustion engines. which too is experiencing high levels of demand for biodiesel purposes. New refineries are being built across Asia and Europe.95 million tons in 2009-10. Biodiesel has been promoted as a form of biomass that can be used as a renewable energy source to reduce net emissions of carbon dioxide into the atmosphere. half a ton of palm kernel endocarp. 1 ton of palm trunks. Global Crude Palm Oil production has been increasing continuously from 1980-81. offering end-user a saving in processing costs.90 million tons in 1980-81 to 44. and 100 tons of palm oil mill effluent (POME). The production has increased manifold from 4. Supply Demand Scenario Global Scenario Being a perennial crop. which can all be used for the manufacture of biofuels. The different properties of the fractions make them suitable for a variety of food and non-food products. For each tonne of crude palm oil (CPO) produced from fresh fruit bunches.and wholly processed grades require little further treatment before use. bioenergy and bioproducts. using simple crystallization and separation processes to obtain solid (stearin) and liquid (olein) fractions of various melting characteristics. Palm oil may also be fractionated. Palm oil producers are investing heavily in the refineries needed for biodiesel. By using all the biomass residues from palm oil processing for renewable energy. 1 ton of press fiber (from the mesocarp of the fruit). Biofuels and bioproducts Palm oil. biodiesel is seen as a way to decrease the impact of the greenhouse effect and as a way of diversifying energy supplies to assist national energy security plans. .
Along with Malaysia.75 million tons in 1980-81 to 20. world’s largest palm oil producer till 2003-04.Malaysia. Looking into above graph. Till 2003-04 Malaysia was the largest palm oil producing country in the world but from 2003-04 onwards Indonesia took over first position by surpassing Malaysia and maintaining first place since then till now. Recently.80%. its multi-usages apart from cooking and recently its importance as bio-fuel. Recently. Above shown graph shows percent of palm oil production by Malaysia and Indonesia in total world production. Its production has increased from 2. Indonesia has emerged as one of the biggest competitor to Malaysia in production of palm oil. production in Indonesia also increased manifold since 1980-81. percent contribution of Malaysia to world production declined marginally from 60% to 25% since 1980-81 till date whereas contribution of Indonesia rose to 45% from a mere 15% in the same period.75 million tons in 2009-10 registering a Compounded Annual Growth Rate of 12. Indonesia has surpassed the Malaysia in production. Its production increased from a mere 0. .57 million tons in 1980-81 to 18.50 million tons in 2009-10. The major reasons attributed for enormous rise in production are consistent efforts taken by the government to cultivation palm plants. has seen continsuous rise in its production. Malaysia and Indonesia are the two largest Crude Palm Oil producers.
Annually India imports more than 5 million tons of different edible oils. Malaysia is the largest palm oil exporter in the Asian continent followed by Indonesia. Crude Palm Oil is the single largest commodity of India’s edible oil import basket. It exports only 6% of total shipment to India. Import Seasonal Indices Method has been adopted to find out seasonality of CPO imports in India. Correlation between Crude Oil and Other edible oils Crude Palm Oil is having good correlation with correlation with Crude Oil prices. its pricing is largely influenced of price movement in latter on Chicago Board of Trade. Since palm oil is close substitute of soy oil. pricing of palm oil depends upon FOB prices of Indonesia because large part of India’s palm oil import is from Indonesia. After getting correction By evaluating above graph. Major destination for Malaysian palm oil export is China having largest share of 43% followed by Indonesia (16%) and Pakistan (12%). government policy of India and Indonesia. Price Analysis Bursa Malaysian Derivatives (BMD) Exchange is considered as global benchmark market for palm oil pricing across the globe. technological inventions showed that CPO can be used as an alternate to crude oil in the form of bio-fuel. we can conclude that import of palm oil in India starts picking up from the month of March and reached peak in May and eases thereafter. Indian Scenario India is one of the largest vegetable oil importers in the Asian continent followed by China. In the recent past. freight charges etc. The import once again starts picking from August and touches highest level in the month of October. On domestic front. world’s largest benchmark agri commodity exchange. . Seasonal Indices are calculated by averaging monthly import data and correcting the total to 1200. this correction factor will be multiplied with monthly average price to get adjusted Seasonal Indices. Since domestic consumption is less it earns large chunk of foreign exchange by exporting huge quantities of palm products.factor by dividing 1200 by the sum of average. The monthly import figure from November 2001 to June 2008 has been taken. Correcting the sum to 1200 will be done to give equal weightage to each month.
000 Crude Oil 0. 325 Resistances: 356.906 0. BMD CPO futures are having good correlation of 97% with CBOT Soy Oil and 90% with NYMEX Crude Oil prices.902 0. price movement in latter has a greater effect on Indian market rather than that of Malaysia.000 Soy Oil 0.911 0.000 Indonesia 0.991 1.880 0.000 Soybean 0.961 0. Sluggish demand for Crude Palm Oil in global market led to sharp fall in prices. which is at 0% is likely to increase the import Technical Update: Supports: 336. fall in crude oil prices dampened the demand of edible oil as an alternate energy source.893 0.991 0.943 0.000 C&F Mumbai 0.972 0.998 1. The correlation of Kandla ready CPO price with Indonesia FOB price is 89%. 367 .762 0.975 0. It is having more than 90% correlation with BMD CPO futures and CBOT Soy Oil futures.988 1.906 0. it can be inferred that domestic CPO prices at Kandla has direct correlation with global market. Effect of movement in Indonesia FOB price is largely seen in C&F prices in Mumbai wit a close correlation of 99. Since India imports huge quantities of palm oil from Indonesia.901 0.8% followed by BMD prices. C&F Soy Soy Crude Kandla Mumbai Indonesia BMD Oil bean Oil Kandla 1.896 1. Moreover.947 0.944 0. Anticipation of good crop harvest also added bearish sentiment to the market.979 1.944 1. Factors to Watch Out For: The new crushing season in Malaysia has begun and progressing well It is expected that demand for palm oil will fall in near term reacting to crude oil prices Arrivals of freshly harvesting oilseeds in most of the countries will exert pressure on the market It is expected that CPO import likely to remain higher in coming days as the international price is at comfortable level Lower customs duty on edible oil. Prices are expected continue its downward trend in near term as the new harvesting has commenced in most of the countries.000 Price Outlook Crude Palm Oil futures prices have fallen sharply in domestic as well as international market in response to weak CBOT market in recent past.000 BMD 0.From the correlation matrix.
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