Global edible oil markets have entered a phase of structural volatility driven by shifting trade dynamics, biofuel mandates, and limited supply growth, according to Sudhakar Desai, president of the Indian Vegetable Oil Producers’ Association (IVPA) and CEO of Emami Agrotech.
Addressing the UOB Kay Hian Conference in Kuala Lumpur on the theme “Navigating Structural Shifts in Global Edible Oils: Implications for India,” Desai said geopolitical realignments are reshaping global trade corridors, compressing arbitrage opportunities and increasing the transmission of energy prices, currency fluctuations, and policy shocks into edible oil markets.
He noted that even minor changes in duties, mandate,s or trade flows are now triggering disproportionate price swings across the supply chain.
Tight Global Supply, Intensifying Inter-Oil Competition
Global production of the four major vegetable oils is projected at 208.4 million tonnes in the 2025–26 season, only marginally higher year-on-year. While output of palm and rapeseed oil is rising, sunflower oil production remains constrained, leaving global balances vulnerable to weather and policy disruptions.
“This limited supply growth keeps inter-oil competition intense, and price spreads unstable,” Desai said, adding that sunflower oil continues to command a premium in global markets.
Biofuel policies are also emerging as a dominant price driver. Indonesia’s biodiesel programme alone absorbs about 14 million tonnes of palm oil, while US biofuel mandates continue to anchor soybean oil price expectations. As a result, edible oils are increasingly behaving like energy-linked strategic inputs rather than purely food commodities, strengthening their correlation with crude oil and policy cycles.
India’s Import Dependence Remains High
India’s domestic edible oil production is estimated at around 9.6 million tonnes in the 2025–26 oil year (October–September), meeting only about 40% of national demand. The country is therefore expected to import roughly 16.7 million tonnes of edible oils.
Imports are projected to include 8–8.5 million tonnes of palm oil, 5–5.5 million tonnes of soybean oil, 2.8–3 million tonnes of sunflower oil, and about 200,000 tonnes of other oils, including zero-duty inflows routed through Nepal.
Desai highlighted that India’s import basket is highly sensitive to inter-oil price differentials, particularly between palm and soybean oil. A price shift of just $50–60 per tonne can significantly reallocate import volumes, underscoring the absence of stickiness in bulk oil sourcing. Palm oil imports have already fallen from over 10 million tonnes in 2021–22 to around 8 million tonnes as sustained premiums and competition from soybean and sunflower oil reshape market share. Refining margins, he added, remain under pressure.
Trade Deals and Policy Signals Shape Outlook
Recent free trade agreements and bilateral arrangements with partners including the United States, European Union, Australia, the UAE, and SAFTA members are increasingly influencing landed costs, arbitrage flow,s and refining economics.
Desai noted that clarity on potential tariff concessions or quota mechanisms for US soybean oil could further shape market dynamics. A newly announced quota of 500,000 tonnes of corn DDGS is expected to benefit India’s poultry and aquaculture sectors, though its impact on domestic soybean prices remains uncertain.
Price Outlook for 2026
Malaysia’s palm oil production is projected at 19.9 million tonnes in 2025–26, slightly below last year’s 20.2 million tonnes, while Indonesia’s output is expected to reach 51.8 million tonnes, up from 51.2 million tonnes. Slow replanting in both countries could keep supplies tight in the near term, supporting prices until March 2026.
However, sustained premiums over soybean oil may limit palm and sunflower oil consumption in India. Desai expects Bursa Malaysia Derivatives (BMD) prices to remain policy-driven but range-bound, with April–June trading likely between 4,000 and 4,400 and July–September between 4,200 and 4,600. Sunflower oil prices are expected to stay elevated until the next production cycle.
Overall, Desai warned that structural volatility—rather than short-term disruption—is becoming the defining feature of the global edible oil market, with significant implications for India’s import strategy, pricing, and supply security.