Global Edible Oil Markets Enter Structural Volatility Phase Amid Trade and Biofuel Shifts
12 February 2026, New Delhi: Global edible oil markets are entering a phase of structural volatility driven by trade realignments, tightening supply growth, and expanding biofuel mandates, according to Mr. Sudhakar Desai, President of the Indian Vegetable Oil Producers’ Association (IVPA) and CEO of Emami Agrotech Ltd.
Addressing the UOB Kay Hian Conference in Kuala Lumpur on the theme “Navigating Structural Shifts in Global Edible Oils: Implications for India,” Mr. Desai highlighted that geopolitical restructuring and policy changes are reshaping global trade flows, compressing arbitrage opportunities, and increasing price sensitivity across the supply chain.
He noted that even minor adjustments in import duties, biofuel mandates, or trade flows are now triggering disproportionate price swings in edible oil markets, amplifying the impact of energy prices, currency fluctuations, and policy decisions.
Global Supply Outlook and Price Pressures
Mr. Desai said global production of the four major vegetable oils is projected to reach 208.4 million tonnes in the 2025–26 marketing year, reflecting only marginal growth compared to the previous year. While palm and rapeseed oil output is expected to rise, sunflower oil production remains constrained, keeping global supply balances vulnerable to weather-related disruptions and policy shifts.
The limited expansion in supply is expected to intensify competition among major oils and maintain volatile price spreads. Sunflower oil, in particular, is likely to continue commanding a premium in international markets.
Biofuel mandates are emerging as a key market driver. Indonesia’s biodiesel programme currently absorbs around 14 million tonnes of palm oil annually, while U.S. biofuel policies continue to support soybean oil demand and price expectations.
According to Mr. Desai, edible oils are increasingly functioning as energy-linked strategic commodities rather than purely food-based products. This structural shift is raising the price floor and strengthening correlations with crude oil trends and government policy cycles.
India’s Growing Import Dependence
Turning to India’s market outlook, Mr. Desai estimated domestic edible oil production at 9.6 million tonnes in the 2025–26 oil year (October–September), meeting only about 40 percent of the country’s consumption needs. As a result, India’s edible oil imports are expected to reach around 16.7 million tonnes.
The projected import basket includes 8–8.5 million tonnes of palm oil, 5–5.5 million tonnes of soybean oil, and 2.8–3 million tonnes of sunflower oil, along with approximately 200,000 tonnes of other oils, including zero-duty imports routed through Nepal.
He emphasized that India’s import mix remains highly sensitive to price differentials between major oils, particularly palm and soybean oil. A price shift of USD 50–60 per tonne is sufficient to significantly alter import volumes, reflecting limited stickiness in bulk oil consumption patterns.
Palm oil imports, which exceeded 10 million tonnes in 2021–22, have already declined to around 8 million tonnes due to sustained price premiums and increasing competition from soybean and sunflower oil. Refining margins in India also remain under pressure, constraining demand growth.
Trade Agreements Reshaping Market Dynamics
Mr. Desai highlighted that free trade agreements (FTAs) and bilateral trade arrangements with partners including the United States, European Union, Australia, the UAE, and SAFTA member countries are now integral to market pricing and sourcing strategies.
These agreements significantly influence landed costs, arbitrage opportunities, and refining economics. He noted that further clarity on potential tariff concessions or quota mechanisms for U.S. soybean oil would provide additional direction to the market.
Under recent trade arrangements, a quota of 500,000 tonnes of corn DDGS has been announced, which is expected to support India’s poultry and aquaculture sectors. However, its impact on domestic soybean prices remains uncertain.
Production Trends and Price Outlook
Providing a production outlook, Mr. Desai projected Malaysia’s palm oil output at 19.9 million tonnes in 2025–26, slightly lower than 20.2 million tonnes in the previous year, while Indonesia’s production is expected to increase marginally to 51.8 million tonnes from 51.2 million tonnes. Replanting progress in both countries continues to remain slow, contributing to near-term supply tightness.
He expects this tight supply situation to support prices until March 2026. However, sustained premiums over soybean oil are likely to limit palm and sunflower oil consumption in India.
Malaysian palm oil futures (BMD) are expected to remain range-bound but highly policy-driven, trading in the 4,000–4,400 range between April and June and in the 4,200–4,600 range during July–September as palm and soybean oil compete for market share. Sunflower oil prices are expected to remain elevated until the next production cycle.
Need for Policy Stability
Mr. Desai concluded that with edible oil markets increasingly driven by policy shocks rather than traditional supply cycles, stable and predictable duty structures and biofuel mandates are essential to prevent unintended price transmission to consumers.
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