Palm Oil Market to Reach USD 121.2 Billion by 2035, Driven by Rising Food and Biofuel Demand

Palm oil is one of the most widely consumed vegetable oils in the world and plays a critical role in the global food, cosmetics, biofuel, and chemical industries. Extracted from the fruit of oil palm trees (Elaeis guineensis), palm oil is valued for its high yield, cost efficiency, and versatile applications. It is used extensively in processed foods, bakery products, personal care items, detergents, pharmaceuticals, and biodiesel.

The global palm oil market is valued at over USD 82.7 billion in 2024 and is projected to expand at a CAGR of around 3.6% from 2025 to 2035, reaching approximately USD 121.2 billion by 2035, driven by rising consumption of processed foods, growing biodiesel production, and increasing use of palm-based ingredients in cosmetics and personal care products

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Market Size and Growth Trends

The global palm oil market is valued in the hundreds of billions of U.S. dollars and is projected to witness consistent expansion over the next decade. Demand is expected to rise at a moderate to strong compound annual growth rate (CAGR) as the food processing, cosmetics, and renewable energy sectors continue to grow.

Asia Pacific remains the largest and fastest-growing regional market, supported by rising urbanization, disposable income, and food manufacturing activities. Europe and North America show stable demand, driven by industrial and personal care applications, while Africa and Latin America are emerging as important consumption and production regions.

Growing consumption of packaged foods, confectionery, instant noodles, baked goods, and cooking oils is directly boosting palm oil demand worldwide. In addition, the increasing use of palm oil in biodiesel blends is supporting long-term market expansion.

Key Players:

• AAK ABpubl
• Anglo Eastern Plantations
• Boustead Plantations Berhad:
• Cargill
• Golden Agri-Resources (GAR)
• IOI Group
• Musim Mas Group
• PT Bakrie Group
• SIAT SA
• Sime Darby Plantation
• Socfin SA
• Unilever
• United Plantations Bhd
• Wilmar International Ltd

Key Market Drivers

Rising Global Food Demand

Palm oil is a staple ingredient in a wide range of food products, including margarine, snacks, bakery items, frying oils, and ready-to-eat meals. The rising global population and changing dietary habits are driving higher demand for affordable and stable cooking oils, positioning palm oil as a preferred option.

Cost Efficiency and High Yield

Palm oil produces more oil per hectare than soybean, sunflower, or rapeseed oil, making it highly economical. This productivity advantage allows manufacturers to maintain lower costs while meeting growing global demand.

Expanding Biofuel Industry

Palm oil is widely used in biodiesel production, especially in Southeast Asia and Europe. Government policies promoting renewable energy and reduced carbon emissions are increasing the use of palm oil-based biofuels.

Strong Demand from Cosmetics and Personal Care
Palm oil derivatives such as fatty acids and glycerin are widely used in soaps, shampoos, creams, and detergents. The rapid growth of the beauty and hygiene industries is contributing significantly to market growth.

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Market Segmentation

By Source

• Crude Palm Oil (Seed)
• Crude Kernel Palm Oil (Nut's Hard Shell)

By Form

• Palm Olein
• Palm Stearin
• Palm Esters

By Application

• Food & Beverages
• Bakery products
• Margarine & spreads
• Confectionery & snacks
• Others (Dairy & Dairy Alternatives, etc.)

By Distribution Channel

• Business-to-Business (B2B)
• Business-to-Consumer (B2C)
• Online Channels

Market Challenges

Environmental and Sustainability Concerns
Deforestation, loss of biodiversity, and greenhouse gas emissions linked to palm oil plantations have led to increasing scrutiny from environmental organizations and governments. This has resulted in stricter sustainability regulations and certification requirements.

Price Volatility

Palm oil prices are influenced by weather conditions, crop yields, government policies, and global supply-demand dynamics. Price fluctuations can impact profit margins for both producers and buyers.

Regulatory Pressure

Many countries have imposed sustainability and traceability requirements, which increase compliance costs for producers. Some regions also limit palm oil imports based on environmental and ethical concerns.

Regional Analysis

Asia Pacific

Asia Pacific dominates the global palm oil market, with Indonesia and Malaysia being the largest producers and exporters. Rapid population growth, increasing food consumption, and strong biodiesel programs in countries such as Indonesia and Thailand drive demand.

Europe

Europe is a major importer of palm oil, particularly for biodiesel and food manufacturing. Sustainability regulations are influencing sourcing patterns, encouraging the use of certified palm oil.

North America

The United States and Canada consume palm oil mainly in processed foods, cosmetics, and industrial products. Demand is stable and supported by the food and personal care industries.

Latin America and Africa

These regions are emerging as both producers and consumers. Governments are promoting palm cultivation to support economic development and reduce dependence on imports.

Technological and Sustainability Trends

Sustainability has become a central theme in the palm oil industry. Companies are increasingly adopting:
Roundtable on Sustainable Palm Oil (RSPO) certification

Traceability systems using digital platforms

Zero-deforestation policies
Improved farming techniques for higher yield with lower environmental impact

Technological advancements in plantation management, harvesting, and refining are helping improve efficiency and reduce waste, supporting long-term industry growth.

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Future Outlook

The future of the palm oil market looks positive, driven by steady demand from food, energy, and consumer goods industries. While environmental concerns remain a challenge, investments in sustainable practices and certification programs are helping to improve the industry's image and market access.

Rising consumption in emerging economies, coupled with growing biodiesel usage, is expected to maintain strong demand. Companies that prioritize sustainability, supply chain transparency, and technological innovation will be best positioned to capitalize on future opportunities.

Frequently Asked Questions (FAQs)

1. Why is palm oil widely used?
Palm oil is affordable, stable at high temperatures, and has a long shelf life, making it ideal for food processing and industrial applications.

2. Which country produces the most palm oil?
Indonesia is the largest palm oil producer, followed by Malaysia.

3. Is palm oil environmentally harmful?
Unsustainable palm oil production can cause deforestation and biodiversity loss, but certified sustainable palm oil is produced using environmentally responsible practices.

4. What industries use palm oil?
Palm oil is used in food, cosmetics, detergents, pharmaceuticals, and biofuels.

5. What is the future of the palm oil market?
The market is expected to grow steadily, supported by food demand, renewable energy initiatives, and rising consumption in developing economies.

More Trending Reports by Transparency Market Research -

1. How big was the global palm oil market in 2024?
The global palm oil market was valued at US$ 82.7 Bn in 2024

2. How big will the global palm oil industry be in 2035?
The global palm oil industry is projected to reach more than US$ 121.2 Bn by the end of 2035

3. What are the factors driving the palm oil market?
Rising demand for processed and convenience foods and expanding applications in personal care and home care are some of the factors driving the expansion of palm oil market.

4. What will be the CAGR of the global palm oil industry during the forecast period?
The CAGR is anticipated to be 3.6% from 2025 to 2035

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