Palm oil prices surged to RM4,500 per metric ton in Kuala Lumpur on Wednesday, the highest level since July 2022.
The surge raised concerns about rising global food costs, which are escalating.
The value of palm oil, a raw material used in a wide range of products from biscuits to shampoo, has risen more than 20% this year.
This is due to a lack of supply from major producing countries such as Indonesia and Malaysia.
Limited supply coupled with high demand is driving prices up, with smallholders reluctant to replant old trees.
Meanwhile, the yield from Indonesia is expected to decrease to 51 million tons this year, compared to 54.8 million in 2023.
Palm oil now sells for an incredible premium over soybean oil.
The ongoing effects of the El Niño phenomenon and the rise in crude oil prices, driven by tensions in the Middle East, also increased the demand for palm oil to be used as fuel.
However, with winter approaching, demand for this oil is likely to slow price increases, as palm oil tends to freeze in cold temperatures, prompting buyers to turn to other alternatives.
The increase in palm oil prices is expected to put significant pressure on the global retail market, as part of a trend of rising food prices that began since Russia's invasion of Ukraine.
This increase will not only affect farmers and producers, but will also drag consumers into the reality of higher food prices.
