Palm oil is extracted from the mesocarp of the fruit of an oil palm species called Elaeis guineensis. In Malaysia , the high yielding tenera , which is a cross between dura and pisifera species , is the most commonly cultivated palm tree . The Malaysian palm oil contributes to about 12% of total vegetable oil production in the world in 2007 . Basically , there are two main products of the palm oil industry – palm oil and palm kernel oil. Out of these , many products could be derived. Crude palm oil is normally processed by a physical refining process in which the oil is turned into a golden yellow refined oil for further end use applications.