Increased global demand for palm oil improves prices and also domestic production

From 2021 to 2022, the price of crude palm oil in the international market increased by 24%, going from US$925 to US$1,150 per metric ton. This factor caused the value of exports of this product to increase by 32%, according to data from the Gremial de Palmicultores de Guatemala (Grepalma).

Karen Rosales, executive director of the entity, said that the increase in international prices of crude palm oil was influenced by an increase in demand for the product since the pandemic, due to its use in hygiene and health products, and because countries Asians reduced their production due to labor problems.

The improvement in prices had an impact on an increase in the value of exports, for which reason the income of foreign exchange from palm oil registered an increase of 32% in 2022, in relation to 2021, going from approximately US$715.5 million to US$940. millions.

The volume of oil production also registered an increase the previous year with 1 million 20 thousand metric tons of crude oil, while the year before it was 941 thousand 963 metric tons, which is equivalent to an increase of 8%, according to Rosales. 80% of production is exported, while 20% remains to cover national demand.

“What is interesting about this data on production growth is that the sector is focusing on increasing its efficiency and productivity, not so much on expanding the cultivation area, which only increased 2%. The good practices and the technology implemented have made it possible to achieve a greater weight of the fruit bunch and with it, more oil extracted per tree”, he emphasized.

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The oil palm sector maintains good expectations for 2023 and expects international prices to remain between US$900 and US$1,100 per metric ton of crude oil. In addition, a reduction in exports from one of the Asian countries will favor demand. Before the pandemic, in 2019, oil was trading around $480 a metric ton.

According to Rosales, today the sector has an installed capacity of 1,046 tons/hour of fruit processing. With the production levels of 2022, the production capacity reached 950 tons/hour, so there is still room to grow and cover 1,300,000 metric tons of crude oil.

Palmeros hope to open two new plants this year, which will allow them to grow 10% in installed production capacity. In addition, in the next five years, the production area would increase between 5% and 8%. Today, the area cultivated with oil palm at the national level is estimated at 180 thousand 614 hectares.