Crude palm oil Palm oil is obtained from fresh fruit bunches (FFB) of oil palm cultivated in plantations.

There are several commercial variants of palm oil available viz., Crude Palm oil , Crude Palmolein , RBD (Refined Bleached Deodorised) Palm oil, RBD Palmolien and Palm Kernel Oil. Crude Palm oil when subjected to refining results in the other factions. Palm oil with an annual production of 25-27 million tons is second most produced oil in the world. Malaysia (13 million tons) and Indonesia (10 million tons) are the major producers. They together account for 85% of production around 80% (2123 million tons) of global production is exported. Malaysia and Indonesia with 12-12.5 and 6-7 million tons respectively are major exporters. India, China and EU are the major importers. Price competitiveness has been reason for increased consumption of this oil .Important World Palm oil Markets Bursa Malaysian Derivatives (BMD) is the largest futures market for crude palm oil. Malaysian & Indonesian FOB prices set the mood in the physical market. Indian Scenario India imports roughly 2.5-3.5 million tons of palm oil and its variants a year. The domestic production is very meager at 0.5 lakh tons. India imposes 65% duty on crude oil and 75% (imposed in 2003-04 Union Budget) on RBD Palm oil. The import ratio is highly dependent on the duty imposed. In addition to the customs duty, Government of India also imposes tariff value, on which the customs duty is calculated irrespective of the actual price at which the oil is imported. In 2002-03 India imported 21.5 lakh tons of crude palm oil and 3.15 lakh tons of RBD Palm oil. However, in 2003-04 till July from November '03 India has imported 13.7 lakh tons of crude palm oil and 4.8 lakh tons of RBD Palm oil. Kandla, Mumbai, Kakinada are the major ports for palm oil entry to India and the major trading points too.

Palm oil producers, merchants, and stockists face risk of large value losses on their production, purchases and stocks from fall in prices. Similarly the exporters are exposed to heavy risks from adverse price increases on their overseas or domestic sale commitments for delivery at a later date. Futures trading are an effective tool in their hand to hedge their price risk.
India In World Palm oil Industry Particular Annual Oil Production Annual Oil Imports Annual Oil Consumption India 0.05 3 3 World 26 22 26 % Share 0.2 13.6 11.5

Crude palm oil balance sheet - World and India (in `000' tonnes) World Particulars Beginning stock Production Imports 2011-12 4,427 50,261 37,991 2010-11 5,237 47,260 35,424 2009-10 4,885 45,862 34,751 2008-09 4,132 43,992 33,664 2007-08 4,389 41,084 30,284 2006-07 4,211 37,329 26,432 2001-02 3,201 25,312 16,480

Consumption Exports total supply Ending stocks

49,896 38,820 92,679 3,963

47,292 36,202 87,921 4,427

44,629 35,632 85,498 5,237

42,108 34,795 81,788 4,885

39,318 32,307 75,757 4,132

35,981 27,602 67,972 4,389

24,510 17,693 44,993 2,790

India Particulars Beginning stock Production Imports Consumption Exports total supply Ending stocks 2011-12 605 50 7,100 7,550 7,755 205 2010-11 940 50 6,500 6,885 7,490 605 2009-10 727 50 6,603 6,440 7,380 940 2008-09 40 50 6,867 6,230 6,957 727 2007-08 52 50 5,013 5,075 5,115 40 2006-07 24 50 3,650 3,670 2 3,724 52 2001-02 440 35 3,400 3,725 3,875 150