The palm oil industry is "at the dawn of a new period of expansion" in part thanks to increasing interest from food groups, which are moving into production to ensure supplies of an increasingly important commodity.
A need to grow palm oil production, which is seeing the industry spread geographically from its strongholds in Indonesia and Malaysia, is not just attracting investment from the likes of Agriterra, the farming group which last week revealed it was following plantation giants such as Sime Darby and Wilmar International into West Africa.
Users too are increasingly investing in the sector, so securing supplies of a commodity in increasing demand, with which output has been unable to keep up, Hardman & Co said.
World stocks, as a proportion of consumption, will fall below 8% at the end of next year, for the first time in 40 years, according to Hardman estimates.
"Production of palm oil has become a globally important industry, and globally scaled industrial companies are now beginning to move upstream to acquire the assets of that production," Hardman analyst Doug Hawkins said.
"As the producers begin to look beyond East Asia to West Africa and the Americas for new suitable regions to expand production, another trend is also evident – the move upstream into palm oil production by food manufacturers and commodities trading houses."
He cited the entrance by Indonesian biscuits-to-noodles group Tiga Pilar Sejahtera Food into palm oil plantations two years ago, only to sell a stake in the operation to Bunge, the US oilseeds and crop trading giant, last month.
In September, agribusiness giant Archer Daniels Midland revealed a five-year plan to develop 12,000 hectares of palm plantations in Brazil,
"It would appear that the oil palm sector is at the dawn of a new period of expansion."
However, this growth is also being driven by a greater by countries other than Indonesia and Malaysia – which produce nearly 80% of world production, but where environmental laws are increasingly restricting new developments – of the potential for palm oil.
Developing palm oil plantations will be a "critical development path" for West African nations who can use it to "alleviate rural poverty and to support downstream processing and manufacturing industries".
Liberia, which held elections last month, has lured investment from Sime Darby, besides London-listed minnow Equatorial Palm Oil.
"The oil palm sector is of vital importance to Liberia's future," in boosting the economic plans unveiled by President Ellen Johnson-Sirleaf after her re-election for a second term.
'Market needs confirmation'
The comments follow a much-watched palm oil conference in Bali last week at which leading analysts gave mixed views on price prospects.
Dorab Mistry, at Godrej International, restated a forecast of Kuala Lumpur prices hitting 3,300 ringgit a tonne in January, boosted by a prospect of flat Malaysian output combined with demand growth.
"After my speech in China on November, crude palm oil futures did make a dash towards 3,300 ringgit. This was clearly premature and the bad macro situation has pulled them back," he said.
"The market needs to see confirmation of lower production and strong exports in order to make a sustainable move higher. I believe that will happen in December."
However, James Fry, head of LMC International, forecast a depressing effect on prices from crude, whose price is especially vulnerable to world economic setbacks, with every $10 a barrel drop in prices of Brent crude cutting edible oil prices by $70 a tonne.
"With many signs of slowing world trade, this weakness will hit the growth in demand for oils, not only for food, but also for biofuels, as transportation is affected," he said.
Edible oil prices are linked to the energy market through their use in making biodiesel.