The price of this raw material, which is used in everything from chocolate to cosmetics, is the highest in 10 years.
However, palm oil production in Indonesia and Malaysia, the world's first and second largest producers, has been significantly affected by the outbreak, which has led to fluctuations in global palm oil prices and knock-on effects for many industries around the world that depend on palm oil.
Indonesia and Malaysia, the world's top two producers, together account for 85 percent of the world's palm oil production and supply. Rabobank, the Dutch bank, estimates that more than 70 per cent of Malaysia's palm-oil labourers come from abroad. Overseas workers account for up to 84 percent of Indonesia's palm oil industry, according to Reuters.
Labor shortages have plagued the palm oil industry in Indonesia and Malaysia in recent years, exacerbated by blockades, and palm oil production in both countries has rebounded this year after a sharp decline since the outbreak.
According to the Malaysian Palm Oil Association, labor shortages have already reduced potential production by 20% to 30%, and they expect that share to rise further this year, especially among smaller Palm Oil producers.
The drop in production has also had a significant impact on prices. The United Nations Food and Agriculture Organization released data this month showing that global vegetable oil prices have risen for 12 consecutive months, with the price of palm oil in May reaching the highest level since February 2011.
India, the world's largest vegetable oil importer, imported more than 700,000 tonnes of palm oil from Malaysia in April, almost double the amount in the same month last year, despite both Indonesia and Malaysia raising export taxes on palm oil.
But palm oil prices have more than doubled in the past year, so there are signs of a recent spike. The s&p global platts, according to a report released on June 14 local Malaysian palm oil futures prices in August fell by 10% in the day, this is on the one hand, market participants are pinning their hopes on the outbreak caused by capacity influence can be gradually restored, on the other hand, on the other hand, because as a substitute for soybean oil prices in recent days appear callback.
Palm oil is not only a major edible oil, but also an important industrial raw material for the production of a variety of commercial products, from chocolate to cosmetics. Therefore, changes in palm oil prices may also bring some price pressure to the downstream industry chain.