Soybean and Palm Oil Refining Business. Refining of Crude Soya Bean and Palm Oil. Opportunities in Edible Oil Industry

Soybean oil is one of the most important edible oil used in India. Soybean oil in its crude form is the second most traded oil in international market after palm oil. Degummed (Crude) and Refined soy oils are the two traded forms of the commodity in the spot as well as futures markets.

Crude Degummed Soybean Oil is a product obtained when soybean are processed in the production of protein products and after lecithin extraction. It is important because of the high content of linoleic acid, an essential polyunsaturated fatty acid, as well as the other valuable minor ingredients such as phytosterols, tocopherols (antioxidants) and fat-soluble vitamins.

Extracted from soybean, soybean oil is extensively used for household cooking and in great demand from restaurants as well. This oil has an important role in the preparation of shortenings and margarine. A number of factors are driving the global soybean oil market; these include the emulsifying ability of the oil and its low-calorie content. Soybean oil has no trans-fat and negligible saturated fat, making it a preferred choice from among all other oils. The soybean market is anticipated to grow in the years to come owing to a rise in the demand for food, growing population, improvement in retailing network, rapid urbanization, and increasing soy crop yields.

Palm Oil

Palm oil is a product type of vegetable oil, extracted from the reddish pulp of palm oil fruits. For oil & gas industry, it is supplied as in the crude form that is without being refined or processed. In comparison with other types of vegetable oils, palm oil consumption provides benefits to its consumer such as improving energy levels, enhancing vision, maintaining hormonal balance and so on. It is also rich in antioxidants, beta-carotene and various nutrients including vitamin K, omega-3 & omega-6 fatty acids and several lipids.

Crude palm is a widely used as an edible oil with a market volume share of 77%, is likely to remain an integral part of consumer diets, despite ban on its inclusion in dairy products in certain countries. Raw red oil is one of the most widely consumed products across the world and is likely to remain a dominant segment.

Market Outlook

The global market for Palm Oil is projected to exceed 85 million metric tons by 2024, driven by ubiquitous application in broad range of everyday products and the resulting growing demand for certified sustainable palm oil.

Besides several favorable factors, stringent environmental regulations governing production, on the other hand, is anticipated to hamper the global market growth. A higher production cost owing to the adoption of sustainable production methods is presumed to be another market restraint and is anticipated to ward off new market entrants.

The global market is characterized by stringent government regulations mandating companies to conform to sustainability in production and extraction. Transitioning consumer preferences regarding carbon-emitting fuels and sources are leading to higher demand in biodiesel applications.

Asia Pacific palm oil market dominated the overall demand in 2015 and it accounted for the significant share of the market. Production in the region increased significantly in recent years driven by the increase in the cumulative land area of palm oil plantation, rising palm oil yield, and high investment in R&D related activities. Malaysia and Indonesia palm oil industry currently dominate the global production scenario. They are also the major global exporters, covering a large portion of the global trade. Latin America and the Middle East & Africa are expected to witness significant growth in areas such as food applications and other industrial uses.

Moreover, the low cost of palm oil compared to the other vegetable oils has boosted the palm oil market growth in the estimated period. Furthermore, rising market penetration by the majority of oil producing countries such as Malaysia, Indonesia, and Thailand might hint the novel prospect in the palm oil market in the upcoming period.

Palm oil refining industries are most important manufacturing sectors in the world and Palm oil has become an increasingly important vegetable oil in the world market and today is the largest traded vegetable oil in the world. Malaysia is the largest producer and exporting company of Crude Palm oil.

Key players in palm oil market are Cargill Inc., United Palm Oil Industry Public Company Limited, Wilmar International Limited, Sime Darby, Golden Agri Resources Limited, Godrej Agrovet Limited, PT Astra Agro Lestari Tbk, IOI Corp., London Sumatra, Kulim Bhd, Musim Mas Group, Alami Group and ADM.

Soybean Oil Market

The global soybean oil market reached a volume of 48.8 Million Tons in 2017, registering a CAGR of 1.9% during 2010-2017. The market is projected to reach a volume of 55.6 Million Tons by 2023, at a CAGR of 1.8% during 2018-2023. Soybean oil refers to a clear yellow vegetable oil which is extracted from the seeds of soybean. It is a rich source of essential nutrients like vitamins, proteins, fatty acids and plant sterols. As a result, soybean oil helps in improving immunity, preventing osteoporosis, managing heart health, boosting skin and eye health, lowering cholesterol levels, and reducing the threat of cognitive disorders. Over the years, soybean oil has become a preferred choice for cooking in households and restaurants due to its neutral taste, high smoke point and negligible saturated fat content.

Some of the key factors which are influencing the demand for soybean oil in the global market is due to increasing number of health conscious consumers and changing preference of consumers towards healthy food. Nowadays, soybean oil is highly preferred among consumers suffering diseases from high cholesterol, obesity and cardiovascular as it helps to manage cholesterol, improves the immune system, reduce cognitive disorder and also helpful to maintain healthy skin.

These are some key factors which are driving the demand for soybean oil in the developed and developing countries. Moreover, it is also preferred by food manufacturers to fulfill the demand for consumers seeking for food products with highly nutritional content.

Food manufacturers are using soybean oil as a key ingredient as it has low saturated fat value, no trans-fat, and fewer calories and on the other side the demand for soybean oil is also fueling from healthcare industry as it is a rich source of omega-3 fatty acids, vitamins and minerals. In addition, the versatility of soybean oil is also one of the key factor which creates opportunities for rubber and plastic industries, pharmaceutical and nutraceutical products across the global market. In future, the growth soybean may inhibit due to the availability of substitutes such as sunflower oil, olive oil, palm oil and many other conventional oil which may limit the growth of soybean oil market.

On the basis of the regional segment, soybean oil market is segmented into seven regions including North America, Latin America, Western Europe, Eastern Europe, Asia-Pacific, Japan and the Middle East & Africa. On analyzing the market share on the graph, it is expected that North America and Asia-Pacific accounts for the majority of share in terms of value and volume in global soybean oil market. Furthermore, increasing demand for soybean oil in household purpose and in fast food industry among developing countries of Asia Pacific region. In addition, increasing urban population and increasing number of health conscious consumers in China and India show that Asia Pacific region is expected to be one of the most attractive markets in near future.

The demand for soybean oil has been continuously increasing due to an increased soybean supply and the tightened supply in the market of other vegetable oils, particularly rapeseed oil. Soybean oil is the second most consumed vegetable oil in the world, and its production is driven by its demand in Asia and the U.S.

The growing awareness among consumers regarding advantages of soybean oil in comparison to other vegetable edible oils has driven its demand significantly. The health-related concerns among consumers is likely to shift their food preferences and this will benefit the global soybean market because this oil is a source of omega-3 fatty acids and vitamin E. On the other hand, the availability of substitutes such as olive, rice bran, palm, sunflower, and rapeseed oil in abundance is limiting the demand for soybean oil.

Nowadays, consumers who suffer from health-conditions like obesity, high cholesterol and cardiovascular diseases are incorporating soybean oil in their food. Increasing health-consciousness has created a shift from ready-to-eat (RTE) products to home cooked items which is further catalyzing the growth of the soybean oil market.

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