Palm oil gusher
Palm oil, by some measures the #1 cooking oil in the world (recently surpassing soybean oil), isn't seen much in Europe and North America. But for much of the rest of the world it is a staple for coking and nutrition.
It's an industry that has remained unconsecrated, since, after al, anyone with a little land in the tropics can plant as few oil palms, and many do. But over past year, there have been signs of major consolidation in the industry.
We already covered last December's merger of three major Malaysian palm oil companies, making up a new company called Synergy drive, the dominant company in a country that is #1 producer of palm oil.
Now there is news from Indonesia, the country that is the #2 producer of palm oil. Indofood Agri, an owner of palm oil refineries and plantations, announced it would buy a majority share of rival London Sumatra Indonesia for around $1 billion. (London Sumatra, as its name implies, was founded in London in 1906; in 1994 it was sold to Indonesian owners.) The move combines vast plantations in Indonesia and makes Indofood Agri a major player in the industry. London Sumatra also has plantations producing rubber, cacao, tea, and coffee.
In a side note, Indofood Agri is owned by Indofood Sukses Makmur, the world's largest producer of instant noodle meals. That company produces over 13 billion packets of instant noodles a year.
Another deal in the sector is now beings sealed. Wilmar International, which is the largest palm oil refiner in Indonesia, is buying PPB Group Bhd., a Malaysian firm, which grows oil palms and sugar, for $4.3 billion.
Palm oil prices are at record highs and the expectations are that they will only go higher. As with corn in the US, palm oil is starting to be seen as a serious producer of biofuels. The anticipation of a major second demand front is driving up prices and fueling a move to industry concentration. Perhaps Big Palm Oil will someday rival Big Oil.
11:17:56 AM 
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