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1. What is the difference between palm oil and palm kernel oil? Palm oil is found in the fleshy portion of the fruit (mesocarp), whereas palm kernel oil is found in the kernel or the seed of the fruit. These two oils have very different fatty acid compositions. Palm oil is 50% saturated fat and 50% unsaturated fat. More specifically palm oil contains approximately 44% palmitic acid, 5% stearic acid, 39% oleic acid (monounsaturates), and 10% linoleic acid (polyunsaturates). Myristic acid and lauric acid are negligible. Conversely, the fatty acid composition of palm kernel oil resembles coconut oil, or what one generally thinks of when the term 'saturated fat' is used. Approximately 82% of palm kernel oil is saturated fat with the main contributors being 48% lauric acid, 16% myristic acid, and 8% palmitic acid. Approximately 18% of palm kernel oil is unsaturated fat with 15% oleic acid (monounsaturates) and 3% linoleic acid (polyunsaturates). The specific fatty acids were provided as current research suggests that one cannot simply classify all saturated fat as being 'bad' when pertaining to blood cholesterol levels. Each individual fatty acid demonstrates its unique characteristic on cholesterol regulation. Please refer to the question 'Are all saturated fats bad?' for more detail. The scientific definition of saturated fat is having every carbon bound to as many hydrogens as possible, thus the molecule is absent of double bonds. Saturated fat and saturated fatty acids may be used interchangeably. Often saturated fat is used when generalizing common characteristics of saturated fatty acids. The length of the carbon chain differentiates saturated fatty acids. The saturated fatty acids commonly found in a typical American diet are lauric acid, myristic acid, palmitic acid, and stearic acid. As a rule of thumb, the greater the saturated fat in a food item, the more solid it will be at room temperature. The reverse is also true, the greater the unsaturated fat in a food item, the more liquid it will be at room temperature. 3. Are all saturated fats equally cholesterol elevating? There is scientific evidence that not all saturated fats are equally cholesterol elevating. Studies have found that, compared to other long chain saturated fatty acids, stearic acid appears to have a neutral effect on total cholesterol and low-density lipoprotein (LDL), otherwise known as the 'bad' cholesterol1, 2. Studies have found that, compared to palmitic acid, lauric acid and myristic acid increase total blood cholesterol, LDL cholesterol (the 'bad' cholesterol), high-density lipoprotein (HDL), the 'good' cholesterol, and the LDL/HDL ratio in both nonhuman primates, and normo-cholesterolemic men and women who consumed a typical western diet3,4. The myristic acid and lauric acid from coconut oil increased total blood cholesterol, LDL, HDL, and triglycerides5. Another study found that, in normocholesterolemic primates, dietary palmitic acid and oleic acid produced similar effects on LDL and HDL metabolism6. These findings were confirmed in studies with normolipidemic humans who consumed a moderate fat diet low in myristic acid and dietary cholesterol, which found the effect of palmitic acid on total blood cholesterol and LDL/HDL ratio to be comparable to that of oleic acid7,8. Oleic acid is a monounsaturated fatty acid which studies have found to have beneficial effects on total blood cholesterol, LDL, and HDL, in comparison with saturated fats.
In summary, the literature suggests that both stearic acid and palmitic
acid, which comprise virtually all the saturated fats in palm oil, have
neutral to favorable impact on serum lipid profiles compared to lauric
and myristic acid. The majority of unsaturated fat molecules are in the cis configuration thus having the carbons on the same side of the double bond. Most unsaturated fats are cis except for some naturally occurring trans in meats and milk. However when hydrogenation, taking a liquid fat and making into a solid fat by the addition of hydrogens, is performed trans fats are created. Trans fats have the carbons on the opposite side of the double bond. Hydrogenation is used to remove the unsaturation of fatty acids in order to increase the oxidative stability of oils and to raise their melting points, which allows for the modification of their physical properties allowing for a broader range of usage in the food industry. Hydrogenated oils are often used in processed foods due to their stability. Trans fats have not been required on the food label, but will be as of 2006. A product contains trans fatty acids if a hydrogenated oil is listed under the 'ingredient' section of the food label. Research within the last decade has shown a detrimental effect of trans fat on cholesterol (see 'Which is better trans fats or saturated fats'). 5. What are the uses of Palm oil? Palm
oil may be used in a variety of ways. Trans free uses of palm oil are
shortenings, margarine, puff pastry margarine, frying, and vanspati.
6. How do the physiological effects of trans fat compare to saturated fats? Extensive
research on trans fats (see 'What are trans fats?') has occurred in
the past decade. Numerous studies have suggested that trans fat consumption
elevates LDL cholesterol (the 'bad' cholesterol) 1,2,3,4,5 and decreases
the ratio of HDL cholesterol (the 'good' cholesterol) to LDL cholesterol
resulting in a less desirablecholesterol profile.6 In 1999, a meta-analysis
of comparative effects of trans fats versus saturated fats on cholesterol
was performed. This study found that as the fat intake increased the
LDL: HDL cholesterol ratio (a low value is desired) also increased in
a dose-dependent manner, and that trans fat consumption increased this
ratio by more thatn saturated fat consumption.
•
Judd J.T., Clevidence B.A., Muesing R.A., Wittes J., Sunkin M.E.,
Podczasy J.J. (1994) Dietary trans fatty acids: Effects on plasma lipids
and lipoproteins of healthy men and women. Am. J. Clin. Nutr. 59:861-868. 7. Can Palm oil be used to make trans free products? Yes, palm oil may be used to make trans free products. Palm oil is approximately 50% saturated fat and 50% unsaturated fat. Due to such a unique characteristic palm oil may be separated under controlled thermal conditions into two components, a solid form (palm stearin) and a liquid form (palm olein). This is a type of fractionation (see 'What is fractionation') process and may occur in either a dry form or in the presence of a detergent or solvent. Palm stearin is then utilized to form more solid fats, such as margarines, without the need of hydrogenation, and thus being trans free. Fractionation is a physical method using the crystallization properties of triglycerides to separate a mixture into a low melting liquid fraction and a high melting liquid fraction. There are three different types of fractionation: dry fractionation, detergent fractionation, and solvent fractionation. The two components resulting from the fractionation of palm oil is palm olein (liquid oil) and palm stearin (solid form). 9. Is palm oil that is used for frying trans-free? Frying is usually performed at 180°C and thus a fat used for frying must be able to withstand high temperatures without adverse chemical changes. Oils high in unsaturated fatty acids as well as those containing large amounts of linoleic and linolenic acid are not suitable for frying due to their tendency to oxidize and break down or polymerize. In the USA, hydrogenated vegetable oils have been the oil of choice for frying. However, these fats contain trans-fatty acids that pose a health concern. Palm oil may be used for frying without the need of hydrogenation, and thus creating trans-free oil for frying. Palm oil is a good frying oil as it contains a moderate level of linoleic acid, negligible amounts of linolenic acid and natural antioxidants. Vitamin E is a general term used with two subclasses: tocopherols and tocotrienols. Among vegetable oils, palm oil is one of the richest sources of tocotrienols. Tocotrienols are also found in rice bran oil, germ protein of barley, wheat, and rye, and grapeseed oil. Tocotrienols are potent antioxidants and have been found in some cell culture and animal studies to exhibit anti-cancer properties. 11. Isn't palm oil a tropical oil, which is high in saturated fats and should be avoided? Tropical oils are generally thought of as having a high saturated fat content and should be avoided. Although, palm oil is grown in the tropical regions, compared to other tropical oils, its saturated fat content is approximately 30% less. Palm oil is often confused with the more highly saturated palm kernel oil and coconut oil. Studies have found that, unlike coconut oil, palm oil's impact on serum lipid and lipoprotein profiles compares favorably to corn oil, hydrogenated soybean oil, and olive oil. A 1995 study comparing the effect of palm olein and olive oil diets on twenty-one healthy, free-living normocholesterolemic subjects found no difference in total and LDL-cholesterol levels. In sum, palm oil appears to affect serum lipids more like a monounsaturated than a saturated oil. 12. What are the effects of palm oil on blood cholesterol? Recent studies have compared palm oil with other oils to understand the effect it has on blood cholesterol. An Australian study of twenty-one normocholesterolemic young adults (both men and women) compared the effects of palmolein and olive oil on plasma lipids. The total cholesterol and LDL cholesterol ('bad' cholesterol) were nearly identical between palm olein and olive oil1. A double-blind crossover trial with thirty-eight Dutch males examined the effect replacing their usual saturated fat (animal fats and hydrogenated oils) consumption with palm oil and found no change in total cholesterol, but a 11% increase in HDL cholesterol (the 'good' cholesterol) compared to the control group2. Another crossover study consisted of 33 normocholesterolemic subjects who were challenge fed with a coconut oil-rich diet for 4 weeks and then provided with that test diet, either a palm olein-rich diet or an olive oil-rich diet. The results showed identical total cholesterol, LDL cholesterol, HDL cholesterol, and triglyceride levels3.
In summary, there is evidence that palm oil has similar effects as olive
oil on total cholesterol, LDL cholesterol, and HDL cholesterol. Hydrogenation of fats is the addition of hydrogen to the double bonds in the fatty acid chains. This process is very important in the food industry. Two major objectives are accomplished through hydrogenation of fats, (1) the allowance of the conversion of a liquid oil to a semisolid fat that is more suitable for specific food applications such as margarines and shortenings, and (2) the improvement of oxidative stability of the oil. A major disadvantage of the hydrogenation process is the formation of trans fats (see 'Which is better trans fats or saturated fats?'). 14. What are unsaturated fats? The
scientific definition of an unsaturated fat is having one or more double
bond(s) in the fatty acid chain. There are two types of unsaturated
fatty acids: 15. Why is palm kernel oil hydrogenated in chocolates? In cases where hydrogenated oils are necessary, palm kernel oil may be partially hydrogenated. Since palm kernel oil is already highly saturated (~82%) minimal hydrogenation is needed, thus limiting the trans fat formation compared to a primarily unsaturated fat, such as soybean oil where much hydrogenation is needed. 16. What does palm fruit mean under the ingredient section of the food label? Occasionally, palm fruit may be listed under the ingredient section of the food label. This is sometimes used in substitution for palm oil. 17. What is the fatty acid composition of palm olein versus palm stearin post fractionation? The resulting two components of the palm oil fractionation (see 'What is fractionation') is palm olein (liquid) and palm stearin (solid). The fatty acid composition of palm olein is approximately 45% saturated fat and 55% unsaturated fat. The main saturated fatty acids are 40% palmitic acid and 5% stearic acid. The unsaturated fatty acids are 43% oleic acid (monunsaturates) and 12% linoleic acid (polyunsaturates). The fatty acid composition of palm stearin is approximately 60% saturated fat and 40% unsaturated fat. The main saturated fatty acids are 54% palmitic acid, 5% stearic acid, and 1% myristic acid. The main unsaturated fatty acids are 33% oleic acid (monounsaturates) and 7% linoleic acid (polyunsaturates). The main saturated fats in both palm olein and palm stearin are palmitic acid and stearic acid which may be neutral fats on cholesterol (see 'Which is better trans fats or saturated fats?'). 18. What gives palm oil its red color? Palm oil naturally contains carotenes (pro-vitamin A) which gives it its red color. Palm oil carotenoids have comparative alpha-carotene and beta-carotene distribution as carrots. (The refined red palm oil that is available in some food stores in the US has 15 times the amounts of carotenes compared to carrots and 300 times more than tomatoes!). Approximately 1 tablespoon of red palm oil meets 100% of the adult reference dietary intake (RDI). Furthermore, some animal studies have found that carotenoids may have beneficial effects on cancer and coronary heart disease. 19. Are carotenoids lost during the refining process? During
the conventional refining process 100% of the natural carotenes (pro-Vitamin
A) and a substantial portion of vitamin E were destroyed. However, with
the new refining technology, greater than 90% of the natural carotenes
and vitamin E may be retained. Commodity Futures are contracts to buy specific quantity of a particular commodity at a future date. It is similar to the Index futures and Stock futures but the underlying happens to be commodities instead of Stocks and indices.
Commodity futures market has been in existence in India for centuries. The Government of India banned futures trading in certain commodities in 70s. However trading in commodity futures has been permitted again by the government in order to help the Commodity producers, traders and investors. World-wide, commodity exchanges originated before the other financial exchanges. Infact most of the derivatives instruments had their birth in commodity exchanges. 22. What are the major commodity Exchanges? The Government of India permitted establishment of National-level Multi -Commodity exchanges in the year 2002 and accordingly three exchanges have come into picture. They are •
Multi -Commodity Exchange of India Ltd, Mumbai (MCX). At international level there are major commodity exchanges in USA, Japan and UK. Some
of the most popular exchanges around the world are given below along
with the major commodities traded :
23. Commodity markets are small. Aren't they? This is the biggest myth about the commodities market.Commodities (spot) Markets in India are about Rs.11 trillion worth per annum. Internationally
the futures market in commodities is 5-20 times that of the spot market.
Look at the table given below. Even if we assume a 5 times multiple
the commodity futures markets can grow up to become Rs.55 trillion per
annum.
24. What are the volumes in commodity exchanges recently? The
two exchanges (NCDEX & MCX) have seen tremendous growth in less
than two years. The daily average on these two exchanges put together
has now grown to a healthy Rs.16000 Crores. It has been believed by
experts that the volumes on these exchanges would overtake the stock
market volumes in the days to come.
25. What are the working hours for the commodity exchanges? Commodity Exchanges (MCX and NCDEX) function from 10.00 AM to 11.30 PM everyday. However, only Metals, Bullions and Crude Oil are available for trading after 5.30 PM. On Saturdays, the exchanges are open from 10.00 AM to 2.00 PM
Just as SEBI regulates the stock exchanges, commodity exchanges are regulated by Forwards Market Commission (FMC); Forwards Market Commission works under the purview of the Ministry of Food, Agriculture and Public Distribution. 27. Who benefits from dealing in commodity futures and how? Commodity futures are beneficial to a large section of the society, be it farmer, businessmen, industrialist, importer, exporter, consumer. If you are an investor, commodities futures represent a good form of investment because of the following reasons. • Diversification The returns from commodities market are free from the direct influence of the equity and debt market, which means that they are capable of being used as effective hedging instruments providing better diversification. • Less Manipulations Commodities markets, as they are governed by international price movements are less prone to rigging or price manipulations by individuals. • High Leverage The margins in the commodity futures market are less that the F & O section of the equity market. If you are an importer or an exporter, commodities futures can help you in the following ways… • Hedge against price fluctuations Wide fluctuations in the price of import or export products can directly affect your bottom-line as the price at which you import/export is fixed before-hand. Commodity futures help you to procure or sell the commodities at a price decided months before the actual transaction, thereby ironing out any fluctuation in prices that happen subsequently. If you are a producer of a commodity, futures can help you as follows : •
Lock-in
price for your produce If you are a farmer there is every chance
that the price of your produce may come down drastically at the time
of harvest. By taking positions in commodity futures you can effectively
lock-in the price at which you wish to sell your produce. If you are a large scale consumer of a product, here is how this market can help you : •
Control your cost If you are an industrialist, the raw material
cost dictates the final price of your output. Any sudden rise in the
price of raw materials can compel you to pass on the hike to your customers
and make your products unattractive in the market. By buying commodity
futures, you can fix the price of your raw material. 28. How risky are these markets compared to stock & bond markets? Commodity prices are generally less volatile than the stocks and this has been statistically proven. Therefore it's relatively safer to trade in commodities. Also the regulatory authorities ensure through continuous vigil that the commodity prices are market-driven and free from manipulations. However, all investments are subject to market risk and depends on the individual decision. There is risk of loss while trading in commodity futures like any other financial instruments. 29. Are trades/ settlements guaranteed by the exchanges? Yes, the commodity exchanges have got some of the most high profile corporate as their promoters. Multi Commodity Exchange of India, promoted by Financial Technologies Ltd has got on board institutions such as SBI, HDFC Bank, Canara Bank, Corporation Bank, Bank of India, Union Bank of India, Bank of Baroda. The National Commodity and Derivatives Exchange (NCDEX) has got NSE, ICICI, NABARD, CRISIL, LIC, PNB, Canara Bank as the major share-holders. Such a high profile share-holding provides these exchanges valuable experience, knowledge and also high standards of operations, Also the exchange guarantees the settlement of trades and so eliminates the counter- party risk in the transactions. The exchange for this purpose maintains a Settlement Guarantee fund akin to the stock exchanges. 30. Are there physical deliveries in commodity futures exchanges? Yes, the exchanges, in order to maintain the futures prices in line with the spot market, have made available provisions of settlement of contracts by physical delivery. They also make sure that the price of futures and spot prices coincide during the settlement so that the arbitrage opportunities do not exist. 31. How are the deliveries made possible? The exchange has enlisted certain cities for specific commodities as the delivery centres. The seller of commodity futures, upon expiry of the contract may choose to deliver physical stock instead of settling the positions by cash, in which case he would be required to deliver the stocks to the specified warehouses. The buyer of the commodity futures, if he is interested in physical delivery would be matched with a seller and would be required to take delivery of the specified quantity of stock from the designated warehouse. World-wide commodity futures are generally used for hedging and speculation and hence physical deliveries are negligible. However, the possibility of physical delivery has made these markets more attractive in India. Both NCDEX and MCX have successfully completed physical delivery in bullions and various agro-commodities. In case of NCDEX it is mandatory to open a Demat account with an approved DP by the buyer and seller if they wish to take /give delivery of goods, MCX has also come out with Electronic Delivery. Please note the delivery and settlement procedure differs for each exchange and commodity. Read the delivery/settlement procedure carefully before deciding to give/take physical delivery. 32. Do I need to pay Sales Tax/ VAT on all trades? Is registration mandatory? No. If the trade is squared off no sales tax is applicable. The sales tax is applicable only in case of trade resulting into delivery. Normally it's the seller's responsibility to collect and pay the sales tax. The sales tax is applicable at the place of delivery. Those who are willing to opt for physical delivery need to have sales tax registration number. 33. Are any transaction duty charges imposed on commodity futures contracts .as in case of stocks? Although FMC does not levy any transaction charges as of now, the respective commodity exchanges levy transaction charges. Transaction charges are in the range of Rs 4 to Rs 6 per lakh/per contract, which may differ for each commodity/exchange. 34. What is the date of expiry? At NCDEX the contracts expire on 20th day of each month. If 20th happens to be a holiday the expiry day will be the previous working day. 35. What are the commodities on which futures trading take place? At
present futures are available on the following commodities.
* Since the exchanges continue to add new products, the above list may be outdated. 36. How much are the margins on these Commodity future contracts? Generally commodity futures require an initial margin between 5010% of the contract value. The exchanges levy higher additional margin in case of excess volatility. The margin amount varies between exchanges and commodities. Therefore, they provide great benefits of leverage in comparison to the stock and index futures trade on the stock exchanges. The exchange also requires the daily profits and losses to be paid in/out on open positions ( Mark to Market or MTM) so that the buyers and sellers do not carry a risk of not more than one day. |
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