The global vegetable oil industry is entering a new phase where policy decisions, energy markets, climate developments and geopolitics are increasingly influencing production, trade flows and price formation, according to Sudhakar Desai, President of the Indian Vegetable Oil Producers' Association (IVPA). Speaking at the 17th China International Conference on Oils and Oilseeds (CCOC-17) in Shanghai, Desai outlined a detailed outlook for the sector through marketing year 2025-26.
Global Production and Consumption Outlook
According to Desai, production of the four major global vegetable oils is projected to increase by 3.1 per cent to around 212.5 million tonnes (mt) in marketing year 2025-26. Global consumption is expected to grow by 1.9 per cent to nearly 211 mt. Although the supply balance remains broadly comfortable, market direction will increasingly be shaped by policy developments and external macroeconomic factors.
| Metric | Volume (million tonnes) | Change vs Previous Year |
|---|---|---|
| Production | 212.5 | +3.1% |
| Consumption | 211.0 | +1.9% |
Supply-Side Dynamics and Policy Drivers
On the supply side, Malaysian palm oil production is expected to reach 19.8 mt, while Indonesian production is projected at 49.3 mt, representing a combined decline of about 900,000 tonnes from the previous year. However, Indonesia is expected to divert around 14.6 mt of palm oil towards biodiesel, assuming implementation of the B50 mandate from July 1, 2026. This would translate into an additional 1.5 to 1.8 mt of palm oil being absorbed by the biofuel sector compared with the previous year, significantly influencing global trade flows and supply availability.
Desai noted that market direction over the coming months will largely depend on Indonesia's B50 biodiesel programme, evolving US biofuel policies, crude oil prices, currency movements, weather developments, and export policies of major producing countries. While the outlook for the 2026-27 sunflower oil crop remains encouraging, the evolution of El Nino continues to be a key variable influencing global oilseed production and vegetable oil prices.
Price Outlook for Key Oils
On the price outlook for the second half of the year, Desai said Bursa Malaysia Derivatives (BMD) crude palm oil futures are expected to trade within a range of RM4,200-4,700 per tonne. He added that palm oil and soybean oil are likely to trade within a relatively narrow price spread. However, supported by favourable global sunflower seed plantings, sunflower oil is expected to lose its current premium of $150-200 per tonne and normalise to a premium of around $50-70 per tonne over soybean oil.
India's Edible Oil Scenario
Desai highlighted that India consumes nearly 25 mt of edible oils annually, with imports meeting around 60 per cent of domestic demand. He emphasised that improving farm productivity and oilseed yields will be critical to enhancing domestic production, while the southwest monsoon will remain a key determinant of the upcoming oilseed season. He also highlighted the long-term potential of oil palm cultivation in strengthening India's edible oil security.
Desai expects India's edible oil imports to reach 16.8 mt in 2025-26, comprising:
- 8.5 mt of palm oil
- 5.1 mt of soybean oil
- 3 mt of sunflower oil
- Around 200,000 tonnes of other edible oils
Stating that India and China have significant opportunities to deepen cooperation across the vegetable oil value chain, Desai said stronger engagement through efficient logistics, complementary market strengths, and enhanced commercial partnerships can contribute to more resilient regional supply chains and sustainable growth for both countries. He concluded that the global vegetable oil industry is entering a more interconnected and dynamic phase where informed policymaking, innovation, and international collaboration will play an increasingly important role in shaping future trade and investment.
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