The present invention relates to a process for producing polyol from natural oil preferably palm oil and its derivatives such as palm olein, palm stearin and palm kernel oil. In another embodiment of the present invention, the polyol can be reacted with isocyanate compounds to produce polyurethane adhesives therefrom. The polyurethane adhesive produced according to the present invention can be use to join most other materials. These polyurethane adhesives make tough, vibration resistant adhesives with a wide range of operating temperature.