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Food and Drinks
AsiaSoutheast Asia

Chocolate to get more expensive as palm oil prices skyrocket

  • The tropical oil is found in an array of products, including chocolate, pastries, soaps, lipstick and biofuel
  • While there are alternatives like soybean oil and sunflower oil, prices for those have been rising too, increasing concern over global food inflation

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Chocolate and other products are likely to cost more as palm oil prices shoot up. Photo: Shutterstock
Bloomberg

The meteoric rise in palm oil prices is poised to inflate costs for everyone from restaurants to confectionery and cosmetic manufacturers, and could potentially change consumption patterns.

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The world’s most consumed edible oil has surged more than 120 per cent in the past year and burst through 4,500 ringgit (US$1,091) a ton to a record on Wednesday.

The tropical oil, which is found in products as diverse as chocolate, pastries, soaps, lipstick and biofuel, and is widely used in Asian restaurants, has been swept up in the global commodity rally as farm crops soar on weather worries and China’s crop-buying spree.
A worker harvests palm oil fruit in Selangor, Malaysia. Photo: Bloomberg
A worker harvests palm oil fruit in Selangor, Malaysia. Photo: Bloomberg
Palm oil, which is mainly produced in Indonesia and Malaysia, is so popular that one study estimates about half of all packaged products found in supermarkets contain it.
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While there are alternatives – like soybean oil and sunflower oil – prices for those have been rising too, increasing concern over global food inflation, which is already at the highest in seven years.

“We’re in uncharted waters at these levels,” said Marcello Cultrera, an institutional sales manager and broker at Phillip Futures in Kuala Lumpur. “The high prices will mainly affect costs of fast-moving consumer goods’ manufacturers in the short term.”

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