Global edible oil markets have entered a phase of sustained or “structural” volatility, driven by shifting trade dynamics, biofuel mandates, and constrained supply growth, according to Sudhakar Desai, president of the Indian Vegetable Oil Producers’ Association (IVPA).
Speaking at the UOB Kay Hian Conference in Kuala Lumpur, Desai said geopolitical realignments have altered global trade corridors, compressing arbitrage opportunities and increasing the transmission of energy prices, currency movements, and policy shocks into edible oil markets. As a result, even small changes in duties, mandates, or trade flows are now triggering outsized price movements across the supply chain.
Providing a global outlook, Desai said production of the four major vegetable oils is estimated at 208.4 million tonnes in the 2025–26 season, only marginally higher year-on-year. While output of palm oil and rapeseed oil is expected to rise, sunflower oil production remains constrained, keeping global supply balances tight. This limited growth, he noted, leaves markets vulnerable to weather disruptions and policy changes, intensifying competition between oils and leading to unstable price spreads. Sunflower oil continues to command a premium in global markets.
Biofuel mandates have emerged as a key structural driver of prices. Indonesia’s biodiesel programme alone absorbs around 14 million tonnes of palm oil annually, while biofuel policies in the United States continue to anchor global soybean oil price expectations. Desai said edible oils are increasingly functioning as energy-linked strategic inputs rather than purely food commodities, raising the price floor and strengthening their correlation with crude oil and policy cycles.
India’s domestic edible oil production is projected at 9.6 million tonnes in the 2025–26 oil year, covering only about 40% of national consumption. This reinforces the country’s dependence on imports estimated at around 16.7 million tonnes. Of this, palm oil imports are expected to account for 8–8.5 million tonnes, soybean oil 5–5.5 million tonnes, sunflower oil 2.8–3 million tonnes, with around 200,000 tonnes of other oils, including zero-duty imports routed through Nepal.
Desai said India’s import basket remains highly sensitive to inter-oil price differentials, particularly between palm and soybean oil. A shift of just $50–60 per tonne in price spreads can lead to large-scale reallocation of import volumes, highlighting the lack of stickiness at the bulk oil level. Palm oil imports have already declined from more than 10 million tonnes in 2021–22 to around 8 million tonnes, as sustained premiums and competition from soybean and sunflower oil alter market share dynamics. Refining margins, he added, remain under pressure, limiting demand momentum.
On trade policy, Desai said recently concluded free trade agreements and bilateral arrangements with partners such as the United States, the European Union, Australia, the UAE, and SAFTA members have become integral to pricing and sourcing decisions. These agreements directly influence landed cost structures, arbitrage flows, and refining economics. He added that further clarity on potential tariff concessions or quota mechanisms for US soybean oil would provide additional market direction.
Sharing his price outlook, Desai projected Malaysia’s palm oil production at 19.9 million tonnes, compared with 20.2 million tonnes last year, and Indonesia’s output at 51.8 million tonnes, up slightly from 51.2 million tonnes. Slow progress in replanting in both countries is likely to keep near-term supplies tight, supporting prices until March 2026. However, sustained premiums over soybean oil are expected to cap palm and sunflower oil consumption in India. Benchmark palm oil prices are likely to remain range-bound but policy-driven, with trading expected in the 4,000–4,400 range during April–June and 4,200–4,600 during July–September. Sunflower oil prices are expected to stay elevated until the next production cycle.
