A beginner’s guide to palm oil: Price, uses & market overview

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This page explores everything you need to know about palm oil. Gain insights into palm oil market trends, pricing mechanisms, and the environmental impact of palm oil. 

Read on to learn more about this popular commodity and find links to beginner friendly guides explaining how you can get involved in palm oil. 

What is palm oil?

Palm oil is a controversial vegetable oil derived from the pulp of oil palm tree fruits. Primarily grown in tropical regions in Asia, Africa, and South America palm oil is the world’s most consumed vegetable oil accounting for over one-third of global production. 

While palm oil has many economic benefits and is versatile, its production is covered in controversy. Palm oil has been linked to deforestation, biodiversity loss, and even human rights abuses which has resulted in ongoing debates about its sustainability and responsible sourcing practices. 

Palm oil market overview

The palm oil industry is worth over $70 billion in 2025 and is expected to grow to $105 billion by 2030. Although production occurs in several countries, Indonesia and Malaysia account for 85% of palm oil exports, fulfilling demand led by top imports including China, India, and Europe. 

Palm oil predominantly trades on over-the-counter (OTC) markets where producers and large-scale distributors negotiate prices directly. However, palm oil futures contracts exist on exchanges like the Bursa Malaysia Derivatives Exchange and Euronext. 

The price of palm oil has been relatively stable for many years but experienced a spike in value between 2020 – 2022. In those two years, the price of palm oil jumped nearly 300%, although prices have eased after demand has lowered. 

Is palm oil valuable? 

Yes, palm oil is a valuable commodity and there are numerous reasons why investors are attracted to the market. We have highlighted some of these key fundamentals below, explaining what they are and why they matter.

• It is used widely in foods. Palm oil is one of the most used ingredients in food preparation and production. Not only is it the most popular vegetable oil in the world, but it has a balanced nutritional profile that allows it to be used in a variety of ways from cooking oils to packaged goods. 
• Palm oil is very affordable. Palm oil is one of the most affordable cooking oils around. With populations rising in emerging countries across Asia and Africa, palm oil is the most efficient vegetable oil to meet regional demands. 
• Palm oil is used to produce biodiesels. Palm oil is not only cheap to consume and produce, but it also has one of the highest yields per acre among similar commodities. Its chemical composition makes it a good feedstock for biodiesel production. 
• Sustainability issues could restrict supply. Palm oil is controversial, and with pressures surrounding deforestation and environmental issues mounting, extracting palm oil is becoming more difficult. This means there is the potential for supply constraints in the future, which could bode well for investors. 

How to invest in palm oil

You can invest in palm oil by using a commodity trading platform. These platforms offer a range of commodities and are very easy to use. There are different platforms suitable for specific requirements. 

Some let you buy physical palm oil, others let you trade palm oil, and many are designed for investing in the grain. Visit our dedicated guide to discover how to invest in palm oil.

Palm oil in your investment portfolio

A diverse investment portfolio can help protect you during market uncertainty, and the inclusion of palm oil can add value while allowing you to spread your money across various markets. 

Palm oil often moves independently to traditional investments like stocks and bonds. You can include palm oil in your portfolio as a hedge against potential losses. During times of economic uncertainty, investors view commodity grains such as palm oil as attractive options. 

Palm oil vs other commodities

Palm oil is an agricultural commodity. Each commodity is unique in its own way and offers different features for investors and traders. You can learn more about specific commodities using our dedicated guides below. 

• Wheat. Wheat is a grain that is grown around the world and is used for various foods. 
• Corn. Corn is one of the most versatile commodities with many uses, including livestock feed, biofuel, oil, and food. 
• Rice. Rice is the most popular grain commodity and a staple for half the world’s population 
• Soybean. Soybean is a major global commodity used for livestock feed and cooking oil.

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