# Palm oil: Correlation Prices it moves with, and why Source page: https://www.materialinsights.org/commodities/palm_oil/correlation/ Palm oil is the most used vegetable oil, grown mostly in Indonesia and Malaysia. Prices depend on tree yields and weather, biodiesel mandates in producing countries, import duties set by India, and prices of rival oils and crude oil. Market price **World Bank Pink Sheet: Palm oil** $/mt · monthly, Jan 2006 to Sep 2026 #### What its price moves with Selected link ##### Palm oil and Fatty alcohols Monthly changes 0.71 strong correlation 12-month changes 0.88 strong correlation Last 5 years 0.62 monthly changes Lead or lag none No clear lead or lag Price function, Jan 2006 to Sep 2026 Palm oil ≈ 18.0 × (Fatty alcohols)^0.55 R² 0.66 On this fit, a 10% higher fatty alcohols price goes with a 5.4% higher palm oil price over the long run. Units: $/mt and US$/t. Chart: Palm oil and Fatty alcohols prices rebased to 100 at Jan 2006, log scale Both prices rebased to 100 at Jan 2006, on a log scale so equal percentage moves look the same size. Chart: Palm oil price against Fatty alcohols price, monthly, log scales, with fitted line Each dot is one month; paler dots are older (2006), darker dots recent (2026); the ringed dot is the latest month. The dashed line is the fitted price function. Both axes are logarithmic. Chemical [FAl Fatty alcohols](https://www.materialinsights.org/chemicals/fatty_alcohols/)Derived product 0.71 Palm and palm kernel oils are the main feedstocks for fatty alcohols used in detergents. The proxy here is the palm kernel oil price, which comes from the same fruit, so the match is close: monthly moves correlate at 0.71 and yearly moves at 0.88. strong co-movement month to month · 249 months Show charts Chemical [FAME Biodiesel (FAME)](https://www.materialinsights.org/energy/biodiesel/)Fuel use 0.64 Indonesia and Malaysia blend palm oil into diesel, so biodiesel absorbs a large share of supply. The biodiesel proxy is the soybean oil price, so the link also reflects oil substitution: monthly moves correlate at 0.64 and yearly moves at 0.88. moderate co-movement month to month · 249 months Show charts Commodity [Sf Sunflower](https://www.materialinsights.org/commodities/sunflower/)Substitute oil 0.66 Sunflower and palm oil compete for frying and food use, and Indian refiners switch between them on price. Their prices move closely, with monthly moves correlated at 0.66 and yearly moves at 0.87. moderate co-movement month to month · 249 months Show charts Commodity [Soy Soybeans](https://www.materialinsights.org/commodities/soybeans/)Substitute oil 0.43 Soybean oil is the other big edible oil. The series here is the whole soybean, which also carries the value of meal, so the link is weaker than with pure oils: monthly moves correlate at 0.43 and yearly moves at 0.70. moderate co-movement month to month · 249 months Show charts Commodity [Cnt Coconut oil](https://www.materialinsights.org/commodities/coconut/)Substitute oil 0.61 Palm kernel oil and coconut oil are the two lauric oils used in soaps and cosmetics, and both come from tropical Asia. Coconut oil follows palm oil with monthly moves correlated at 0.61 and yearly moves at 0.81. moderate co-movement month to month · 249 months Show charts Energy [Oil Crude oil](https://www.materialinsights.org/energy/crude_oil/)Energy price link 0.44 Higher crude oil prices make palm biodiesel more competitive with fossil diesel and raise fertiliser and freight costs. This shows in the data: monthly moves correlate at 0.44 and yearly moves at 0.60, a common driver rather than a direct input. moderate co-movement month to month · 249 months Show charts How to read these numbers **Correlation of monthly changes** (the number in the coloured pill) compares how much each price moved, month by month, since 2006 or the first month both series exist. It runs from −1 to +1: near +1 the two usually rise and fall in the same months, near 0 there is no link, and a negative number means they tend to move in opposite directions. Above 0.7 is strong, 0.4 to 0.7 moderate, 0.2 to 0.4 weak. **12-month changes** compare year-on-year moves, which shows whether two prices share the same cycles even when the month-to-month noise differs. **Price function** is a straight-line fit of the two prices on logarithmic scales: price ≈ k × (partner price)^β. β is how much this price moves, in per cent, for a 1% move in the partner over the whole period, and R² is the share of the variation the fit explains. Two prices that both drift up with inflation can fit well without any real link, so read it together with the monthly correlation. **Lead or lag** checks whether the monthly correlation is clearly higher when one price is shifted by 1 to 6 months. Correlation is not cause. The reasons on each card explain the economic link; the numbers show how strongly it has shown up in prices. Proxy series are US producer price indexes or related prices and can blur the real link. Data: World Bank Commodity Price Data (Pink Sheet), October 2026; US Bureau of Labor Statistics producer price indexes, IMF primary commodity prices and US EIA prices via FRED, Federal Reserve Bank of St. Louis, retrieved November 2026. Calculations by this site. ## Other sections - [Summary](https://www.materialinsights.org/commodities/palm_oil/index.md) - [Overview](https://www.materialinsights.org/commodities/palm_oil/overview/index.md) - [Extraction](https://www.materialinsights.org/commodities/palm_oil/extraction/index.md) - [Production](https://www.materialinsights.org/commodities/palm_oil/production/index.md) - [Stocks](https://www.materialinsights.org/commodities/palm_oil/stocks/index.md) - [Cycles](https://www.materialinsights.org/commodities/palm_oil/cycles/index.md) - [Trading](https://www.materialinsights.org/commodities/palm_oil/trading/index.md) - [Movement](https://www.materialinsights.org/commodities/palm_oil/movement/index.md) - [Criticality](https://www.materialinsights.org/commodities/palm_oil/criticality/index.md) - [Characteristics](https://www.materialinsights.org/commodities/palm_oil/characteristics/index.md) - [Emissions](https://www.materialinsights.org/commodities/palm_oil/emissions/index.md) - [Relationships](https://www.materialinsights.org/commodities/palm_oil/links/index.md)