Beyond Dawlish

The global edible oil industry continues to evolve rapidly, and at the heart of this transformation lies palm oil—the most consumed edible oil worldwide. With its affordability, high yield, and wide applicability across multiple industries, palm oil has become a cornerstone of the global food supply chain. According to recent forecasts, the palm oil market is set to reach US$ 67.1 billion by 2025, expanding at a compound annual growth rate (CAGR) of 4.5% to touch US$ 90.1 billion by 2032.

This growth trajectory highlights not only the indispensable role palm oil plays in the edible oil sector but also the shifting dynamics driven by sustainability goals, regulatory changes, and evolving consumer preferences.

Palm Oil: A Versatile Commodity in Global Food Systems

Palm oil is derived from the fruit of the oil palm tree and is widely used in cooking, frying, and food preparation. It is a favored ingredient in a vast array of processed foods, including margarine, snacks, baked goods, frozen meals, and instant noodles. One of palm oil’s greatest strengths lies in its neutral taste, extended shelf life, and high oxidative stability, making it a popular choice among food processors.

In 2025, the food and beverage industry is anticipated to account for 61.8% of the total palm oil demand. Brands continue to rely on palm oil for cost efficiency, especially in markets such as Asia, Africa, and Latin America, where demand for low-cost, high-quality oils continues to rise.

Moreover, palm oil is found in over 50% of packaged consumer products, including items not traditionally associated with oils—such as toothpaste, cosmetics, and household cleaners. Its multifunctionality has made it an irreplaceable ingredient for industries beyond food alone.

Asia Pacific Leads as Key Producer and Consumer

The Asia Pacific region is expected to hold 59.4% of the palm oil market in 2025, with Indonesia and Malaysia dominating both production and exports. Indonesia, in particular, produced over 47 million tons of crude palm oil in 2023, making up over 54% of global exports. Palm oil is a vital contributor to the country’s economy, directly or indirectly employing more than 16 million people.

Meanwhile, countries like India, the world’s largest importer of edible oils, are seeing a shift in consumption trends. Despite historically relying on palm oil for its affordability, rising costs and health considerations are prompting refiners and consumers to switch to softer oils like soybean and sunflower. In the 2024-2025 period, palm oil imports to India are projected to dip to a five-year low of 7.5 million metric tons.

Nonetheless, the presence of palm oil in India’s processed food and snack industry remains strong, with major brands continuing to use it for its functional benefits and local availability.

Market Dynamics: Drivers, Challenges, and Opportunities

Key Growth Driver: Rising Processed Food Demand

One of the biggest drivers for palm oil market growth is the surging demand for processed and convenience foods. As urbanization increases and lifestyles become more fast-paced, consumers are leaning toward ready-to-eat meals and snacks that use palm oil for frying and preservation. Palm oil’s relatively low cost and ability to enhance product texture and shelf life make it indispensable in this sector.

Market Restraint: Price Volatility and Health Concerns

Despite its economic benefits, palm oil faces several headwinds. Volatility in prices due to unpredictable weather patterns, floods in producing countries, and changing trade policies can create disruptions in the supply chain. For example, flooding in Malaysia and Indonesia recently caused a spike in prices, compelling companies like Godrej Consumer Products to increase prices of soap products in India in March 2025.

Additionally, the high saturated fat content of palm oil has raised health concerns, particularly in developing countries. Initiatives like India’s “Roadmap for Replacing Trans-fats with Healthy Edible Oils” are educating consumers about healthier alternatives, which may shift demand away from palm oil in the long term.

Opportunity: Free Trade Agreements and Green Investments

Global efforts to liberalize trade and promote sustainability are creating fresh opportunities for market players. The EU-Malaysia Free Trade Agreement, currently in negotiation, is expected to facilitate palm oil exports while strengthening sustainability frameworks and green energy investments. These policies are likely to enhance the reputation and demand for Certified Sustainable Palm Oil (CSPO) across Europe and North America.

Simultaneously, governments and industry stakeholders are investing in regenerative agriculture, deforestation-free supply chains, and traceability technologies, all of which are reshaping how palm oil is cultivated and distributed.

Sustainable Palm Oil Gains Momentum

As environmental awareness grows, companies and consumers are pushing for palm oil that is sourced ethically and sustainably. Certifications such as those from the Roundtable on Sustainable Palm Oil (RSPO) are increasingly becoming industry norms. In 2024, Nestlé reported that 100% of its palm kernel oil and crude palm oil were certified through RSPO, thanks to investments in satellite monitoring, supplier engagement, and sustainability mapping.

China also marked a major milestone in late 2024, receiving its first shipment of RSPO Identity Preserved (IP) certified sustainable palm oil via a collaboration between Wilmar International and the Yili Group. These actions signal the growing global shift toward more responsible consumption patterns.

Regional Outlook and Forecast

Middle East and Africa

In Nigeria, palm oil production is accelerating with the support of strategic partnerships, such as a 2024 agreement with Indonesia to support smallholder farmers and modernize production techniques. Ghana is also seeing innovation at the grassroots level, where the UNDP is supporting energy-efficient and eco-friendly processing solutions for artisanal producers.

North America

Sustainability remains a key theme in North America. While palm oil usage in foods and cosmetics continues to rise, scrutiny over deforestation and environmental impact has increased. Major corporations are being urged to disclose the origins of palm oil and adopt deforestation-free supply chain policies, especially for animal feed and dairy production.

Europe

Europe maintains strict import regulations for palm oil, particularly focusing on sustainability and transparency. With rising demand for green energy and biofuels, especially in Germany and the Netherlands, palm oil is being redirected into biodiesel production, further driving demand for sustainable sources.

Competitive Landscape

The global palm oil market is highly competitive, with key players such as:

• Wilmar International

• Golden Agri-Resources

• Sime Darby Oils

• Cargill

• IOI Corporation

• Agarwal Industries

• Apical Group

• Presco PLC

• Liberty Oil Mills Ltd.

These companies are focusing on capacity expansion, research and development, and strategic collaborations to maintain leadership. For example, PT. Mahkota Group acquired a South Sumatra-based palm oil processing plant in 2019 to scale up operations and enhance product offerings.

Conclusion: Palm Oil at the Core of Global Edible Oil Trade

Palm oil’s status as the most consumed edible oil globally is firmly rooted in its cost-effectiveness, availability, and multipurpose functionality. While the market faces challenges around price volatility and sustainability, these very challenges are inspiring innovation and collaboration across the value chain.

Looking ahead, companies that can balance profitability with planet-positive practices are poised to lead the next era of growth. As consumer awareness rises and regulatory frameworks tighten, the palm oil market is not just expanding—it is transforming into a more responsible, efficient, and resilient industry.