Thailand’s Palm Oil Production Reaches the All-Time High
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According to the Thai Office of Agricultural Economics, Oil Palm plantation areas were 6.08 million rai (1600 square meters) in 2021, with Palm Oil amounting to a record 16.8 million tons (+7.3%) compared to 15.7 million tons in 2020, having Oil Palm yield per hectare to 2,761 kg. The total annual Crude Palm Oil extraction (CPO) was 2.96 million tons (+11.8%), up from 2.65 million tons in 2020.
As of 2021, Thailand accounted for 3.8% of the global total Palm Oil production. There are approximately 390,000 Palm Oil farm households across the country. Large farmers tend to invest in their own Crude Palm Oil mills. In terms of regions, Surat Thani leads with 3.7 million tons of production, followed by Krabi (3.3 million tons), Chumphon (2.7 million tons), Nakhon Si Thammarat (1.7 million tons), Trang (0.7 million tons), Phangnga (0.6 million tons), and Ranong (0.4 million tons).
Also, there are 131 Crude Palm Oil extraction plants with machinery that produces Crude Palm Oil production in the country at about 5.6 million tons per year. Major producers invest in Palm plantations, breeding, and developing Palm species.
Since 2017, it has required Crude Palm Oil extraction plants to buy fresh Palm fruit from farmers at a percentage of Oil of 18% or more (from 17%). As of June 2022, the purchase price of fresh Palm fruit is 9.22 baht per kilogram (+62.3% Y-o-Y).
As of June 2022, the purchase price of the CPO was 51.6 baht per kilogram (+56.3% Y-o-Y) following a decrease in the supply of both fresh Palm fruit and Crude Palm Oil. The Department of Internal Trade has set the price of bottled Palm Oil to float based on the cost. As of June 2022, the retail price of 1 liter of bottled Palm Oil was 69.0 baht (+46.0% Y-o-Y).
Domestic demand for Crude Palm Oil contracted -by 5.8% to 2.38 million tons in 2021 due to government lockdown measures and working from home to prevent the spread of COVID-19, resulting in biodiesel demand in the country.
The CPO demand for biodiesel production in 2021 was 1.15 million tons, a decrease of -15.9% in line with biodiesel consumption. The top biodiesel company is Patum Vegetable Oil Co., Ltd, with an installed capacity of 1.8 million liters per day, followed by Global Green Chemicals PCL (1.7 million liters/day), New Biodiesel Co., Ltd (1.0 million liters/day), and Bangchak Biofuel Co., Ltd (1.0 million liters/day).
Household and oleo chemical industrial use demand for Refined Palm Oil increased 6.0% to 1.24 million tons in 2021, mainly due to the acceleration of food industry groups (such as instant noodles, sweetened condensed milk, and ice cream) as consumers focus on spending.
Palm Oil Market Prospect
The supply of Palm fruit and the CPO expects to increase by 6%-7% this year, mainly driven by plantations tend to increase by an average of 1-2 hundred thousand rai per year due to the Government policy that encourages farmers to expand the area. The total annual CPO volume project is 3.1-3.2 million tons.
The CPO inventories at the end of the year expect to be at 2.8-2.9 hundred thousand tons due to higher supply than demand. As a result, the price of Palm Oil in the country tends to decline but remains in good condition. The cost of fresh Palm fruit expects to be 9-11 baht per kilogram due to the high overseas demand.
Crude Palm Oil consumption projects to grow from an accelerated export growth of around 30%-40%, driven by the food security concerns from the COVID-19 situation and the Russia-Ukraine war.
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