Industry: Food and Beverages
Published Date: March-2025
Format: PPT*, PDF, EXCEL
Delivery Timelines: Contact Sales
Number of Pages: 184
Report ID: PMRREP32448
The global palm oil market size is anticipated to reach a value of US$ 67.1 Bn in 2025 and is set to witness a CAGR of 4.5% from 2025 to 2032. The market will likely attain a value of US$ 90.1 Bn in 2032.
There's a strong possibility that one ingredient will appear in all of your favorite chocolates, instant noodles, and even toothpaste- palm oil. It has subtly permeated every aspect of our lives, powering a wide range of industries, including pharmaceuticals, cosmetics, food, and biofuels. Palm oil is one of the most essential commodities in the modern world and it is being included in more than 50% of all packaged consumer goods.
Environmental concerns have surged as countries like Malaysia and Indonesia are extending their palm oil plantations. Together, both countries supply over 85% of the world's palm oil. Several leading companies are focusing on investing in next-generation synthetic alternatives, sustainable certification programs, and deforestation-free supply chains. Today, the question isn’t whether certain companies can operate without palm oil, but how can they make their manufacturing process more responsible.
Key Highlights of the Palm Oil Industry
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Global Market Attributes |
Key Insights |
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Palm Oil Market Size (2025E) |
US$ 67.1 Bn |
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Market Value Forecast (2032F) |
US$ 90.1 Bn |
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Projected Growth (CAGR 2025 to 2032) |
4.5% |
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Historical Market Growth (CAGR 2019 to 2024) |
3.7% |
Historical Period Saw Companies Incline toward Sustainably Sourced Palm Oil to Reduce Impact on Environment
As per Persistence Market Research, in the historical period from 2019 to 2024, the global palm oil industry witnessed an average CAGR of around 3.7%. Several companies were striving to responsibly source palm oil to reduce pressure on sensitive ecosystems and forests.
Nestlé, for example, adopted various tools like on-the-ground assessments, satellite monitoring, certication, and supply chain mapping to scrutinize deforestation issues in the company’s supply chain. It aimed to enhance its understanding of land rights and human rights risks. The results helped it to detect landscape-level capabilities that can be replicated for other raw materials.
In 2024, all of Nestlé’s palm kernel oil (PKO) and crude palm oil (CPO) came from sources certified by the Roundtable on Sustainable Palm Oil (RSPO). They were also covered by book and claim credits for Certified Sustainable Palm Oil (CSPO) and Certified Sustainable Palm Kernel Oil (CSPKO).
The company further initiated multi-stakeholder, integrated efforts to address sustainability opportunities and challenges at the landscape level. It worked with Earthworm Foundation in Malaysia to promote initiatives like Sabah in northern Borneo, which provided around 6.2% of the total palm oil to the world in 2020. By working together, Nestlé wanted to demonstrate to smallholder farmers the potential of combining regenerative agricultural techniques like forest conservation and intercropping. Similar sustainability steps by companies in the palm oil sector created new opportunities during the historical period.
Improved Yields and Rising Biodiesel Production to Create New Avenues in Forecast Period
From 2025 to 2032, the palm oil industry is likely to showcase a steady CAGR of 4.5%. The period is projected to see enhancements in oil extraction rates and yields as well as reduced exports from specific countries due to biodiesel production.
In February 2025, for instance, FGV Holdings, one of the leading palm oil producers globally, predicted that its output will surge between 1% and 3% in 2025. According to the company, its efforts to replace the old plantation have increased the yields of fresh fruit bunches and the pace of oil extraction, which bodes well for the production of crude palm oil in 2025. Its oil extraction rate (OER) is developing, and the company is targeting nearly 20.8% to 21% compared with 20.61% value achieved in 2024.
Similarly, in March 2025, it was found that declining output and a push for biodiesel in Indonesia, which is considered the world's largest palm oil producer, could keep cooking oil prices high for years by raising the costs of conventionally inexpensive palm oil. More than half of the world's vegetable oil imports are made of palm oil, which is used in various products- right from frying fats and cakes to cleaning supplies and cosmetics. It is particularly well-liked by customers in emerging economies, particularly India.
Due to increased production and competition for market share, Indonesia is utilizing more palm oil to produce biodiesel as output is slowing down after decades of cheap palm oil. If the country continues to prioritize biodiesel, palm oil may not be that inexpensive again.
To reduce fuel imports, Indonesia raised the required percentage of palm oil in biodiesel to 40% in 2025 and is considering surging it to 50% in 2026. Additionally, it plans to implement a 3% blend for jet fuel the following year. Hence, due to rising domestic use and developments in palm oil production, the global market will likely show a steady growth trajectory.
Demand to Rise from Food Corporations and Agrofuel Producers Seeking Affordable Raw Materials
Increasing consumption of palm oil worldwide, especially among large-scale food corporations, demanding cost-effective raw materials to produce agrofuels and ultra-processed products is anticipated to propel the palm oil industry. For instance,
Demand for palm oil is directly linked to high profits, rather than offering consumers healthy nutrition. The industry is constantly seeking land to broaden cultivation. Latin America, for example, has hence become a significant area for expansion. At present, the leading palm-producing countries in the region are Colombia, Brazil, Honduras, Ecuador, and Guatemala. Palm oil exports from Latin America mainly go to Mexico, the U.S., and the European Union (EU).
The Inter-American Development Bank provides loans to extend plantations, including some of the oil palm extensions in Latin America. Transnational banks like Rabobank and HSBC also provide credit for expansion. With support from financial institutions, plantation expansion projects are estimated to rise in various countries globally.
Rising Palm Oil Costs to Compel Consumer Goods Firms to Increase Final Product Prices
Volatility in the prices of palm oil due to supply chain disruptions and adverse weather conditions may hamper the market through 2032. With high prices, the costs of palm oil derived products may also rise. For instance,
Awareness of the negative health effects of palm oil consumption, especially in developing countries, can also hinder the global market. The ‘Roadmap for Replacing Trans-fats with Healthy Edible Oil in India’ project recently found that low-cost palm oil contains high saturated fat, which is linked to heart diseases. The project aims to encourage individuals to opt for local oils like sesame, coconut, mustard, and groundnut that are healthier, which can restrict the market.
Free Trade Agreements to Create Opportunities for Market Players by Supporting Trade Liberalization
Global market players are anticipated to see new opportunities arising from free trade agreements (FTAs), which support trade liberalization. Favorable government policies are projected to not only help enhance market access but also encourage investments in sustainable production methods.
The European Union (EU) and Malaysia, for example, announced in January 2025 that they have resumed negotiations for a free trade deal. It is anticipated that the free trade agreement will enhance the global supply chain in important sectors and yield enormous benefits for various areas of Malaysia's economy.
It would also help augment EU investments in Malaysia across areas such as green energy and manufacturing. At the same time, it would enhance exports of palm oil, scientific equipment, and electronic products to the EU.
Palm Oil’s Affordability in Processed Food Preparation Spurs Adoption in Food and Beverage Industry
In the global palm oil industry, the food and beverage segment is projected to hold a share of 61.8% in 2025. This is attributed to increased use of palm oil in processed foods as it serves an ideal alternative to other expensive vegetable oils. High demand for convenience food like processed snacks, frozen food, and instant noodles is another key factor boosting the segment.
As per studies, significant instant noodles brands like Indofood and Nissin Foods heavily rely on palm oil as a primary frying medium. In frozen ready meals and pastries, the commodity plays an important role in ensuring moisture and texture retention.
The cosmetic and personal care segment, on the other hand, will likely exhibit a decent CAGR through 2032. The industry is a key user of palm oil in makeup, haircare, and skincare formulations. Palm oil derivatives like glycerin, stearic acid, and palm kernel oil are used in moisturizers, lipsticks, shampoos, and soaps to improve their smoothness, stability, and foaming properties.
Superior Functional Properties Make Fractionated Oil Popular in Premium Food Products
By product type, the fractionated segment will likely generate a palm oil market share of 38.6% in 2025. This type of palm oil is gaining traction due to surging industrial use, high demand in specialized food processing, and superior functional properties. It is finding extensive use in bakery products, pastries, and premium chocolates.
Fractionated palm oil, compared to regular palm oil, is separated into liquid and solid fractions with a regulated crystallization process. Manufacturers can produce customized palm oil products with particular melting points due to this method, which makes them highly preferred in a wide range of industries.
Crude palm oil is anticipated to show steady growth through 2032 due to its surging use in biofuel production, especially in the EU and Southeast Asia. It has also gained popularity as a low-cost alternative to sunflower and soybean oils.
Indonesia Strengthens Position as Global Leader in Palm Oil with Surging Domestic and International Demand
Asia Pacific is projected to hold a palm oil market share of 59.4% in 2025. Indonesia is considered one of the most prominent producers of palm oil in the region. Also, with 47 Mn tons of crude palm oil produced in 2023, the country consolidated its position as the world's largest palm oil exporter, making up 54% of worldwide exports.
India palm oil market is anticipated to experience a notable shift in purchasing patterns even though it has been relying on imports to cater to edible oil demands. For instance, in February 2024, studies revealed that palm oil's percentage of India's yearly imports of edible oils is anticipated to fall below soft oils for the first time as refiners turn to less expensive substitutes due to its rising premium over soy and sunflower oils.
Considered the world's largest consumer of vegetable oils, India may import less palm oil, which would bolster U.S. soy oil industry and put pressure on benchmark Malaysian palm oil prices. Due to supply constraints, palm oil is becoming more expensive in India. Hence, consumers are switching to soy and sunflower oils.
In the 2024 to 2025 marketing year that ends in October 2025, the country is estimated to import 7.5 Mn metric tons of palm oil, the lowest in five years. It is anticipated that the country’s total edible oil imports will remain stable at about 16 Mn tons in 2025 due to the easy availability of local oils, which will help meet the surging demand.
Small-scale Palm Oil Producers in Ghana to Benefit from Environmental and Technological Upgrades
In the Middle East and Africa, Nigeria is likely to be a significant palm oil producer. In September 2024, the country signed a Memorandum of Understanding (MoU) with Indonesia to accelerate palm oil production. The MoU focuses on bolstering income for small-scale farmers and improving production techniques. The agreement was signed by the Indonesian Palm Oil Association (IPOA) and the National Palm Produce Association of Nigeria (NPPAN).
Similarly, in February 2025, Raedial Farms Limited announced its plan to cultivate a wide 100,000 hectares of palm oil plantations in Nigeria. This initiative is projected to help bolster the country’s palm oil production, creating several jobs and pushing economic activities in surrounding areas. The expansion project will likely generate revenue of over US$ 1.5 Bn for Raedial Farms and strengthen its position as a leading agricultural company in the country.
Ghana palm oil market, on the other hand, is anticipated to see the utilization of local energy-efficient technology to transform small-scale and artisanal palm oil processing. Around 60 to 80% of the country’s palm oil is produced by artisanal and small-scale producers, who make up a larger portion of Ghana’s palm oil processing sector.
However, conventional metal cooking pots and steel tanks are the primary processing equipment utilized by these producers. They often pollute the environment since they are laden with palm nuts and cooked over an open fire in a traditional cooking range.
To tackle this challenge, the United Nations Development Program (UNDP) in partnership with the Environmental Protection Agency (EPA) and the Ministry of Environment, Science, Technology and Innovation (MESTI) supported 10 low value grants under its Nationally Determined Contributions Support Program (Deep Dive). It is helping to refine waste management and energy efficiency in 11 communities in the Eastern Region of Ghana.
Consumer Goods Forum Urged to Strengthen Deforestation-free Policies for Palm Oil Supply Chains in the U.S.
In North America, the U.S. palm oil market is predicted to gain momentum with rising initiatives by key companies to encourage sustainable oil extraction and production. Despite their promises to solely use palm oil free of deforestation, the makers of iconic snacks like Snickers and Kit Kat may still be using palm oil linked to deforestation in their products, as per a recent study published in Mongabay. It is because a large portion of the dairy used in these foods comes from cattle that are given animal feed made with palm oil, whose import in the U.S. does not take into consideration whether or not it comes from deforested land.
The study further mentioned that 13 out of 14 leading dairy processing companies in the U.S., including Mondel?z and Mars do not provide information about the amount of palm oil-based animal feed utilized in their supply chains. This compels the Consumer Goods Forum (CGF) to include palm oil in their deforestation-free policies, which is similar to its policy revolving around embedded soy.
Canada, on the other hand, is projected to witness considerable growth through 2032. In 2019, nearly 26% of the country’s total imports of oils and fats were palm oil, according to Oil World. In the same year, 11,076 MT of Malaysian palm oil were imported, along with 48,037 MT of Malaysian palm-based oleochemicals, 5,759 MT of completed goods, and 515 MT of palm kernel oil. At the same time, 67,600 MT of palm oil were exported from the U.S. to Canada.
The global market for palm oil houses several multinational companies that make it highly competitive. Key players are anticipated to engage in strategic mergers and acquisitions with cultivators to ensure uninterrupted supply of raw materials. Volatility in raw material prices, however, may adversely affect profitability.
To gain an edge over rivals, leading players are set to adopt a variety of strategies, including capacity expansion and research and development. For instance, through its subsidiary PT Berlian Inti Mekar, the PT. Mahkota Group purchased a palm oil factory in South Sumatra in November 2019. About 400 tons of palm kernel oil are processed daily at this plant, which also manufactures crude palm oil (CPO)-based products like cooking oil and olein.
Key Industry Developments
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Report Attributes |
Details |
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Historical Data/Actuals |
2019 - 2024 |
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Forecast Period |
2025 - 2032 |
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Market Analysis Units |
Value: US$ Bn/Mn, Volume: As applicable |
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Geographical Coverage |
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Segmental Coverage |
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Competitive Analysis |
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Report Highlights |
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Customization and Pricing |
Available upon request |
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The market is set to reach US$ 67.1 Bn in 2025.
The industry will likely be valued at US$ 90.1 Bn in 2032.
The industry is set to surge at a CAGR of 4.5% through 2032.
Olam International, Archer Daniels Midland Company, Presco PLC, and Agarwal Industries Pvt. Ltd. are a few companies.
Indonesia is considered one of the biggest producers of palm oil.
