OECD‑FAO Agricultural Outlook 2025‑2034

3. Oilseeds and oilseed products

Abstract

This chapter describes market developments and medium-term projections for world oilseed markets for the period 2025-34. Projections cover consumption, production, trade and prices for soybean, other oilseeds, protein meal, and vegetable oil. The chapter concludes with a discussion of key risks and uncertainties which could have implications for world oilseed markets over the next decade.

3.1. Projection highlights

Most oilseeds and oil crops (e.g. oil palm fruit) are either crushed or pressed into protein meal and vegetable oil. While about a quarter of their production by weight is used for direct human food consumption as vegetable oil, most is used as protein meal in animal feed. Only a small unprocessed amount is used for direct feeding. The main industrial use of vegetable oil is as feedstock for biomass-based diesel production.

The growth of food demand for vegetable oil is expected to remain strong. This will be driven by rising disposable income and population growth in middle-income countries and population growth in low-income countries.

The direct use of vegetable oil for biomass-based diesel, currently about 18% of global vegetable oil use, is projected to grow globally. This will be especially in Indonesia, Brazil and in the United States, in the form of hydrotreated vegetable oil.

The utilisation of protein meals as animal feed will align with the slower demand from key importers. The People’s Republic of China (hereafter “China”) is expected to reduce its feed consumption growth considerably, driven by improved feed efficiency combined with efforts to achieve lower protein meal shares in livestock feed rations.

Palm oil and rapeseed yields are projected to improve slightly, reversing a decline seen over the last decade in major producing regions.

Trade in oilseeds and oilseed products accounts for a higher share of production compared to other agricultural commodities. Production of soybeans is concentrated in the Americas and palm oil in South-East Asia.

Prices of vegetable oil and protein meals are expected to show diverging future developments. Vegetable oil prices are expected to remain relatively stronger due to sustained demand growth and slower production growth for palm oil and other oilseeds, whereas protein meal prices are expected to be relatively flatter, due to coupled supply and considerable slower demand growth.

Specific uncertainties for oilseeds and products are changing demand patterns and the extent of success in efforts to reverse declines in productivity. About 18% of vegetable oil is used as feedstock for biomass-based diesel and alternative developments in the biomass-based diesel industry directly affects vegetable oil demand projections. In terms of feed demand for protein meal, China might reduce the protein meal share in its animal feed more than currently anticipated. Oil palms and rapeseed experienced declining yields in major producing regions and the projections assume that the obstacles will be overcome, which might not materialise.

3.2. Current market trends

Nominal prices of oilseeds and oilmeals have remained subdued while vegetable oil prices have appreciated markedly

International prices for soybeans were weighed down by ample global supplies, while prices for other oilseeds have strengthened due to declining rapeseed and sunflower seed harvests in 2024/25 season. By contrast, world vegetable oil prices increased recently, as below-potential growth in palm oil outputs coincided with reduced crushing of rapeseed and sunflower seed. For oil meals, international protein meal quotations declined in recent months, driven by prospects of ample soymeal supplies following robust oil-driven crushing activities globally.

Global soybean production in 2024/25 is anticipated to expand by about 7% from the previous season resulting in the first season with a soybean production in excess of 400 Mt, mainly due to forecast output increase from South America. Overall favourable conditions coupled with continued area expansion in Brazil are expected to result in a record high harvest. World palm oil production is expected to increase marginally in 2025, largely driven by expectations of output recovery in Indonesia although production growth could be limited by subdued yields in Malaysia.

3.3. Market projections

3.3.1. Oilseed crush and production of vegetable oils and protein meal

Slowing global oilseed crush and limited growth in palm oil production

Globally, the crushing of soybeans and other oilseeds into meal (cake) and oil accounts for about 90% of total usage. The demand for crush will increase faster than demand for other uses, notably direct food consumption of soybeans (including for meat and dairy replacements), groundnuts and sunflower.

The crush location depends on transport costs, trade policies (e.g. different tariffs for oilseeds and products), acceptance of genetically modified crops, processing costs (e.g. labour and energy), and infrastructure (e.g. crushing facilities, ports and roads).

Soybean crush is projected to expand by 62 Mt over the Outlook period, significantly less than the 95 Mt in the previous decade. Most of the growth is expected to occur in Latin America in contrast to the previous decade where the expansion in soybean crush occurred mainly in China. Global crush of other oilseeds is expected to grow in line with production over the Outlook period and to occur more often in the producing country.

World production of protein meals from oilseed crush is dominated by soybean meal which accounts for more than two-thirds of world protein meal production. Production is concentrated in a small group of countries (Figure 3.1). In China and the European Union, most protein meal production comes from the crushing of imported oilseeds, primarily soybeans from Brazil and the United States. In the other important producing countries‒Argentina, Brazil, India, and the United States‒domestically‒produced soybeans and other oilseeds dominate.

Global vegetable oil production includes the oil part of the crush of oilseeds, including cottonseed, palm kernels and copra as well as palm oil. Coconut oil is mainly produced in the Philippines, Indonesia, and Oceanic islands. Palm kernel oil and coconut oil have important industrial uses. Cottonseed is a by-product of cotton ginning (Chapter 9). Global palm oil output has outpaced the production of other vegetable oils over the past decade. However, growth in palm oil production is expected to weaken due to increasing sustainability concerns and the aging of oil palm trees in Indonesia and Malaysia, which account for almost one-third of the world’s vegetable oil production and for more than 80% of global palm oil production.

At the global level, palm oil supplies are projected to expand at an annual rate of 0.8%. Increasingly stringent environmental policies from the major importers of palm oil and sustainable agriculture norms (e.g. in line with the 2030 UN Agenda for Sustainable Development) are expected to slow the expansion of the oil palm area in Indonesia and Malaysia. This implies that production growth needs to come from productivity improvements, including an acceleration of replanting. Palm oil production in other countries is expected to expand more rapidly from a low base, mainly for domestic and regional markets. For example, Thailand is projected to produce 3.9 Mt by 2034, Colombia 2.1 Mt, and Nigeria 1.9 Mt. In several Central American countries, niche palm oil production is developing with global sustainability certifications in place from the outset, positioning the region to eventually reach broader export markets.

3.3.2. Vegetable oil consumption

Per capita food consumption of vegetable oil remains strong

The two dominant uses of vegetable oil are food and food preparation (52%) and as biomass-based diesel feedstock (18%). A considerable share of the reported food consumption is used for frying rather than human intake which results in an amount of used cooking oil which can be used as feedstock for biomass-based diesel production. Vegetable oils are also used for cosmetics, varnishes, and increasingly in animal feed, especially for aquaculture.

Per capita consumption of vegetable oil for food is projected to increase (0.5% p.a.) due to strongly increasing food demand in lower middle- and low-income countries. In some emerging markets, the consumption of vegetable oil for food is set to reach levels comparable to those of high-income countries (Figure 3.2). By 2034, per capita food consumption is projected to reach 27 kg in China and Brazil, for example. In high-income countries the per capita consumption of vegetable oil is levelling off. In the case of the United States, the increasing role of alternative vegetable oil like olive oil and corn oil (not included in the Outlook) result in declining per capita food consumption.

India, the world’s second largest consumer and leading importer of vegetable oil, is projected to sustain a per capita food consumption growth of 2.5% p.a., reaching 13 kg/person by 2034. This substantial increase will be the result of increases in the crushing of domestically produced oilseeds, supported by numerous government programmes to increase production. However, imports of mainly palm oil from Indonesia and Malaysia are expected to decline so as to rely less on vegetable oil imports.

With urbanisation and disposable income increases in low-income countries, dietary habits and traditional meal patterns are expected to shift towards greater consumption of processed foods that have a high content of vegetable oil. For least developed countries (LDCs), the per capita food demand for vegetable oil is projected to expand to 7.7 kg/person.

The global uptake of vegetable oil as feedstock for biomass-based diesel (about 18% of global vegetable oil use) is projected to increase more slowly at 0.7% p.a. over the next ten years, compared to the 7.7% p.a. increase over the previous decade when biofuel support policies took effect. The use of vegetable oil as feedstock for biomass-based diesel depends on the policy setting (Chapter 8) and the relative price development of vegetable oil and crude oil. In general, national targets for mandatory biomass-based diesel consumption are expected to increase less than in previous years.

In Indonesia, the growth in the use of vegetable oil to produce biomass-based diesel is projected to remain strong and reach 12.6 Mt by 2034 due to supportive domestic policies. In the United States, Hydrotreated Vegetable Oil (HVO) or Renewable Diesel is considered an advanced biofuel and is expected to drive the growth of United States biomass-based diesel production. On the other hand, it is expected that the use of vegetable oil as feedstock for biomass-based diesel in the European Union will shrink by 2.6% p.a. This is due in part to the increasing share of used oils, tallow, and other non-feed and non‑food feedstocks used in the production of biomass-based diesel, which is also apparent in the United States and in China.

3.3.3. Protein meal consumption

Feed demand growth is slowing, shaped by developments in China

The protein meal content of soybeans is about 80% while for other oilseeds this share is 50-60%. Protein meal is almost exclusively used as feed and its consumption is projected to continue to grow at 1.1% p.a., considerably below the 2.4% p.a. seen in the last decade.

The link between feed use of protein meal and animal production is characterized by two offsetting trends. The intensification of animal production increases demand for protein meal, while greater feed efficiency leads to a reduction in protein feed per animal. Demand is also affected by the composition and size of livestock populations and the nature of animal production systems. The link between animal production and protein meal consumption is associated with a country’s level of economic development (Figure 3.3). Lower income countries, which rely on backyard production, consume less protein meal, whereas higher-income economies which employ intensive production systems use higher amounts of protein meal. Because of a shift to more feed-intensive production systems in developing countries in response to rapid urbanisation and increasing demand for animal products, growth in protein meal consumption tends to exceed growth in animal production.

China accounts for more than a quarter of global protein meal demand and is therefore shaping global demand. Growth in China’s demand for compound feed is expected to be slower than in the previous decade due to declining growth rates in animal production, especially pig meat, and the existing large share of compound feed-based production. The protein meal content in China’s compound feed is expected to remain stable after it surged in the last decade but continues to exceed current levels in the United States and European Union.

In the European Union, and the United States, protein meal consumption is expected to grow at a slower rate (or decline faster) than animal production due to improving feeding efficiencies. In addition, in some member states of the European Union animal products, primarily poultry and dairy, are increasingly marketed by the large retail chains as produced without feed from genetically modified crops which also curbs demand for soybean meal.

3.3.4. Oilseed production

Challenges remain for palm oil and rapeseed yield growth

The production of soybeans is projected to grow by 1.0% p.a., compared to 2.2% p.a. over the last decade. Yield increases will account for about 80% of that production growth. Soybeans’ short vegetation period allows for double cropping, with maize in Brazil and wheat in Argentina, which accounts for a considerable share of projected harvested area expansion in Latin America.

Brazil is the largest producer of soybeans and production is expected to grow at 0.8% p.a. over the next decade due to double cropping with maize, slightly more than in the United States, the second largest producer, at 0.5% p.a. The production of soybeans is projected to grow strongly elsewhere in Latin America, with Argentina and Paraguay producing 56 Mt and 13 Mt, respectively, by 2034. In China, soybean production is expected to continue to increase in response to reduced policy support for the cultivation of cereals, but at slower pace than in the previous decade. Soybean production is also expected to increase in India, the Russian Federation (hereafter “Russia”), Ukraine, and Canada.

The production of other oilseeds (rapeseed, sunflower seed, and groundnuts) is also projected to grow at a slower pace, at 1.1% p.a. compared to 2.7% p.a. over the previous ten years. China (a major producer of rapeseed and groundnuts) and the European Union (which mainly produces rapeseed and sunflower seeds) are the most important producers of other oilseeds, with a projected annual output of 42 Mt and 30 Mt, respectively, by 2034. Ukraine and Russia, major producers of rapeseed and leading producers of sunflower seed, are both expected to increase their production of other oilseeds beyond 20 Mt per year by 2034. Canada, the largest exporter of rapeseed, is projected to increase its production of other oilseeds by 0.9% p.a., to reach 19 Mt by 2034.

In the last two decades, area harvested of soybeans, other oilseeds and oil palms increased faster than for cereals (Figure 3.4). This growth in harvested area created pressure on other land uses and environmental resources. In the case of soybeans in Latin America, a considerable part of the expansion of harvested area is due to increasing double cropping of soybeans with maize or wheat. It is expected that the growth of harvested area of soybean, other oilseeds and oil palms will increase to only a limited extent.

Soybean stocks are projected to reach a stock-to-use ratio of almost 17% by 2034, which remains high compared to the past two decades, so harvest failures could quickly lead to market shortages.

3.3.5. Trade

Trade is significant for oilseeds and products, but slowing down

Over 40% of world soybean production is traded internationally, a high share compared to other agricultural commodities. The expansion in global soybean trade is closely tied to the growth trend of soybean crush in importing countries. In China soybean crush growth is expected to slow down compared to the last decade and Chinese imports are projected to remain rather stable at about 107 Mt by 2034 (down from a growth of 3.4% p.a. in 2015-2024), accounting for about 60% of world soybean imports. Exports of soybeans originate predominately from Brazil and the United States. Brazil is the largest global exporter of soybeans with steady growth in its export capacity and is projected to account for 53% of total global exports of soybean by 2034 (Figure 3.5).

For other oilseeds, the internationally traded share of global production will decline to about 11% of world production since the two largest producers, China and the European Union, are net-importers. The main exporters are Canada, Australia, and Ukraine, which are projected to account for 65% of world exports by 2034.

Vegetable oil exports, which amount to 34% of global vegetable oil production, continue to be dominated by a few players, notably Indonesia and Malaysia which account for about 53% of total vegetable oil exports. However, the share of exports in production is projected to contract slightly in these two countries as domestic demand for food, oleochemicals, and, especially, biomass-based diesel uses is expected to grow. India is projected to continue its strong growth in imports at 2.0% p.a., reaching 21 Mt by 2034, to meet increasing demand driven by population growth, urbanisation, and rising disposable incomes. At the same time, the Indian government is carrying out several initiatives to reduce its dependency on imports. These programmes aim at implementing farming techniques and services to strengthen and support domestic production.

The projected growth in international trade of protein meal is 1.3% p.a. over the Outlook period and Argentina with its clear export orientation is expected to remain by far the largest meal exporter. The largest importer is the European Union, however its imports are expected to continue declining due to reduced domestic demand for protein meal. Asia, and particularly Southeast Asia with its increasing animal production, is expected to account for 79% of the global import growth in protein meal. As the domestic crushing capacity in Asian countries is not expected to keep pace with protein meal demand, the projected expansion of the livestock sector will be based on imported feed.

3.3.6. Prices

Real prices remain under pressure over the next decade

Oilseed and product prices are expected to increase slightly in nominal terms over the projection period, while declining in real terms (Figure 3.6). Due to the coupled production of meal and oil and the expected stronger demand for vegetable oil than protein meal, prices of vegetable oil are projected to rise compared to protein meal. This will also favour other oilseeds prices over soybeans as they contain higher shares of oil.

3.4. Risks and uncertainties

Environmental concerns influence global oilseed supply chains

The integration of environmental sustainability consideration into trade regulations could influence global oilseed and oilseed product trade. On the one hand the trade share of soybeans and vegetable oils at around 40% of production is considerably higher than for most other agricultural commodities. On the other hand, palm oil and soybeans are often mentioned when the link between agriculture and deforestation is discussed. Both products are included in the European Union deforestation regulation of 2023 (Regulation (EU) 2023/1115) as relevant products alongside cattle, cocoa, coffee, rubber and wood. The impact on global soybean and palm oil trade remains uncertain but could alter global oilseed and oilseed projections. In producing countries several measures to address these deforestation concerns, including certification of deforestation free production, have been implemented and increase in relevance for trade.

Due to the high trade share of soybeans and vegetable oils their projections are likely to be affected by any deviations from assumed projections trade regimes. Trade flows might shift either due to more beneficial trade conditions in bilateral agreements or due to trade frictions and restrictions.

Yields in major producer regions of palm oil and in some major rapeseed supplier countries have fallen or grown marginally during the last decade (Figure 3.7). There are many reasons for this development including: less productive land was brought into production due to a significant increase in production area; the ageing of oil palms, labour shortages especially in Malaysia, restrictions in the use of pesticides in the European Union; and shifting weather patterns. It remains uncertain how this will play out over the coming decade, but the lower projected area expansion limits the expansion of production into lower productive area over the Outlook period.

The scope for increasing palm oil output in Indonesia and especially in Malaysia will increasingly depend on replanting and yield improvements rather than new area expansion. Nevertheless, replanted or new plantations of oil palms require three to four years to come into production. In recent years, growth in production has been sluggish given the low profitability of the sector and rising labour costs in Malaysia. There has been some replanting progress by major palm oil companies in Indonesia. In addition to the slowdown in yields, sustainability concerns will also influence the expansion of palm oil output as demand in developed countries favours deforestation-free oils and seeks sustainability certification for vegetable oil used as a biomass-based diesel feedstock and, increasingly, for vegetable oils entering the food chain. However, there are concerns about competing certification schemes in Malaysia and Indonesia.

The vegetable oil sector is driven by biofuel policies in the United States, the European Union, Indonesia, and Brazil, the four largest users of biomass-based diesel, given that about 18% of global vegetable oil supplies go to biomass-based diesel production. In Indonesia, attaining the proposed 30% biomass-based diesel mandate is doubtful given the need for government subsidies and possible medium-term supply constraints. In the United States Renewable Diesel or HVO currently receive considerable support in some states (e.g. California) that show strong production growth rates over the outlook period. In the European Union, policy reforms, reduction of overall diesel use and the emergence of second-generation biofuel technologies will likely prompt a shift away from crop-based feedstocks, assumed in the Outlook under fixed policy conditions. Globally, Sustainable Aviation Fuels (SAF) are expected to be a substantial use of biofuels but the timing of introduction remains largely uncertain and the Outlook does not include relevant quantities until 2034.

The development of animal production in China remains the major driving force for global protein meal demand and soybean trade. Overall, the development of meat demand is shaped by declining population and slower but still substantial economic growth. In addition, it is envisaged to replace pig meat by other animal protein with a likely reduction in the demand for protein meal. Protein meals compete in part with other feed components in the production of compound feed, so changes in cereal prices will prompt adjustments in the balance between compound feed ingredients and hence protein meal demand.