Over the last year, we’ve written about the soybean oil trends in the U.S. (here on AEI.ag; here, here, and here on AEI Premium). In light of these, we decided to dig into the broader, global trends in vegetable oil.
Global vegetable oil has increased at an average annual rate of 3.9% since 2000. More precisely, production increased from 90 million metric tons in 2000 to 217.7 million metric tons in 2022, a 141% increase.
Figure 1 shows the production trends for four vegetable oil sources – palm, rapeseed, soybeans, and sunflower seed. In 2022, these four accounted for 87% of global vegetable oil production. However, while the trend has been upward for each, the growth rate hasn’t been the same. For instance, palm oil production was less than soybean oil in the early 2000s, but today is the largest source of vegetable oil. Specifically, palm oil accounts for 36% of total production in 2022, compared to 28% for soybeans.
Another trend caught our attention when considering the vegetable oil trade (Figure 2). Palm oil accounts for 60% of the global vegetable oil trade, a much larger share than global production (36%). Similarly, soybean oil accounts for 28% of global production but only 14% of vegetable oil trade. This is a reminder that trade doesn’t always line up with production. Furthermore, it speaks to the market jitters that took place as Indonesia was working through export bans earlier this spring.
Wrapping It Up
Earlier this year, we wrote about the global crop acreage expansion that’s been underway, driven mainly by oilseeds. Combining those global acreage trends with record high soybean oil prices and a parade of announcements about new crush facilities in the U.S., vegetable oils have been the “hot commodity” in recent years.
While it’s easy to focus on soybeans here in the U.S., the global vegetable oil situation is nuanced. Palm oil, despite its environmental concerns, has led production gains since 2000 and accounts for 60% of the vegetable oil traded. While 40% of global vegetable oil consumption is directly traded, there also is indirect trade via the export of oilseed crops, such as soybeans.
In conclusion, the global growth in vegetable oil has been underway for decades. While biofuels have driven soybean oil usage in the U.S. in recent years, the overall vegetable oil story is much larger than domestic policies and trends and has been underway for many years.