The yield depends on a variety of factors, including age, seed quality, soil and climatic conditions, quality of plantation management, and the timely harvesting and processing of FFB. The typical commercial lifespan of an oil palm tree is approximately 25 years.įully mature oil palms produce 18 to 30 metric tons of fresh fruit bunches (FFB) per hectare. It is only at year seven that the tree reaches peak production, where its output remains until its 18th year, after which it begins its decline. However, the yield of an oil palm tree is relatively low at this stage and remains so until year seven. Oil palm generally begins to bear fruit 30 months (two and a half years) after field planting, with commercial harvest commencing six months later. Here, the young palms are planted about nine meters apart, resulting in 128 to 140 trees per hectare. At the three-month mark, these germinated plants are transferred to an open field for another 6 - 8 months (yielding a total of one year), until final transplantation to an open field. The first, the nursery stage, involves artificially germinating palm seeds (slightly larger than grapes) in plastic containers and growing them in controlled net houses. Upstream: Planting, Cultivation, and Harvesting Recently, however, Nigeria, Thailand, and Columbia have emerged as globally competitive players, collectively accounting for another 7% - 8% of total global CPO output and rising. Since 1980, palm oil production has been dominated by two countries: Indonesia ( 53% of output) and Malaysia ( 31% of output), which collectively account for 84% of global CPO volumes. By way of context, the next largest global vegetable oil by volume is soya bean, which had 120 million planted hectares producing 48 million tons of soya oil as of 2016. These regions must be characterized by abundant levels of rainfall throughout the year, given the perennial profile of the crop, with minimum rainfall of approximately 325 liters per day per planted tree.Īs of 2016, there were 17 million hectares of mature palm oil plantations across the equator, producing a total of 65 million tons of CPO for global consumption. The oil palm tree grows under strict agro-ecological conditions only found in tropical regions that fall within 10 degrees north or south of the equator. Palm oil, which we will refer to herein as CPO, accounts for 35% of the world’s vegetable oil market. Palm oil (elaeis guineensis) is a tropical edible vegetable oil derived from both the pulp (mesocarp) of the palm fruit, yielding crude palm oil (CPO), and from the palm’s fruit kernel (endosperm), yielding palm kernel oil (PKO) oils that differ in quality, density, composition, and end application. This article presents you, our uninitiated finance enthusiast, with the sparsely understood world of palm, exploring its cultivation, harvesting, and application process its financial and investment profile and ultimately the trends governing its future. These challenges include deforestation, greenhouse gas (GHG) emissions, child labor and community exploitation, and conflict: challenges that influence the industry’s demand-supply balance, and thus its pricing and investment dynamics. Palm oil, for decades, has been the quiet stuff of legends.īut despite its success as a crop, palm oil’s planting, cultivation, and harvesting process presents material sustainability challenges that threaten its future prolificacy. Its applications cut across industries from food to cosmetics, chemicals to energy, and pharmaceuticals to animal feed and its profit profile is so lucrative that it has literally seen to the rise and fall of many an emerging market regime. It is a super crop that comprises over half of all packaged products consumed globally, is the world’s most consumed edible oil, and is one the most versatile raw material/substrate bases known to industry.
What are the different ways to invest in palm oil?
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