Palm Oil Market to Skyrocket by 2034 as Global Demand Surges

The global palm oil market is a cornerstone of the agricultural and food industries, serving as one of the most widely consumed vegetable oils in the world. Valued at USD 63.65 billion in 2021 , the market is projected to grow steadily at a compound annual growth rate (CAGR) of 5.0% during the forecast period, driven by its versatility, high yield per hectare, and expanding applications across food, cosmetics, biofuels, and industrial sectors.

Palm oil is derived from the fruit of the oil palm tree (Elaeis guineensis ) and is prized for its high energy content, long shelf life, and semi-solid consistency at room temperature—making it ideal for frying, baking, and food processing. It also serves as a key feedstock for biodiesel production and is used in soaps, detergents, and personal care products due to its emollient properties.

Market Overview

The palm oil industry is characterized by large-scale plantations and integrated supply chains that span cultivation, refining, and downstream manufacturing. The market can be segmented based on:

• Product Type : Crude palm oil (CPO), refined palm oil, palm kernel oil


• Application : Food & beverages, oleochemicals, biofuels, cosmetics


• Region : Southeast Asia, Africa, Latin America, and other emerging markets

Southeast Asia—particularly Indonesia and Malaysia—dominates global production, accounting for over 80% of total output. However, increasing sustainability concerns surrounding deforestation, biodiversity loss, and labor practices have prompted both regulatory scrutiny and consumer awareness campaigns aimed at promoting certified sustainable palm oil (CSPO).

Key Market Growth Drivers

Several factors are fueling the expansion of the palm oil market:

• High Yield and Cost Efficiency : Compared to other vegetable oils like soybean, sunflower, or rapeseed, palm oil offers higher yields per hectare and lower production costs.


• Growing Demand for Processed Foods : As urbanization and disposable incomes rise, especially in Asia and Africa, demand for packaged and processed foods containing palm oil continues to increase.


• Rising Use in Biodiesel Production : Governments in countries such as Indonesia, India, and the U.S. are promoting palm-based biodiesel as an alternative to fossil fuels, supporting market growth.


• Expanding Applications in Non-Food Industries : Palm oil derivatives are increasingly used in cosmetics, cleaning agents, and pharmaceuticals, broadening the market base.


• Technological Advancements in Cultivation and Processing : Improved crop varieties, mechanized harvesting, and efficient refining techniques are enhancing productivity and reducing environmental impact.


• Government Support and Export Incentives : Producers benefit from favorable policies, subsidies, and export promotion schemes in major producing nations.

Leading Companies Shaping the Industry

A number of key players are actively shaping the competitive landscape of the palm oil market through sustainable sourcing, vertical integration, and global distribution networks:

• ADM (Archer Daniels Midland Company) – A global agribusiness leader involved in the processing and trading of palm oil and its derivatives.


• Asian Agri – One of Indonesia’s largest palm oil producers, committed to sustainable practices and smallholder partnerships.


• Cargill Inc. – Engaged in palm oil sourcing, refining, and sustainable supply chain initiatives, with operations across Asia, Africa, and Latin America.


• Godrej Agrovet Limited – An Indian agribusiness conglomerate involved in palm oil cultivation and refining, particularly in Indonesia.


• Golden Agri Resources Limited (GAR) – A leading Indonesian palm oil company focused on sustainability and responsible land use.


• IJM Corporation Berhad – A Malaysian conglomerate with significant palm oil plantation holdings and downstream processing capabilities.


• IOI Corporation Berhad – A vertically integrated palm oil producer with operations spanning plantations, refineries, and oleochemical manufacturing.


• Kuala Lumpur Kepong Berhad (KLK) – One of Malaysia's oldest and largest palm oil producers, with a strong presence in global markets.


• Kulim Berhad – A subsidiary of KLK, specializing in sustainable palm oil production and agro-industrial development.


• London Sumatra Plantations PLC – A diversified agribusiness company operating in Indonesia, known for its premium palm oil exports.


• PT. Bakrie Sumatera Plantations Tbk – An Indonesian plantation company with a focus on palm oil and rubber production.


• Sime Darby Plantation – Part of Malaysia’s Sime Darby group, this company is among the world’s largest sustainable palm oil producers.


• United Plantations Berhad – Known for its high-yield estates and commitment to conservation and wildlife protection.


• Wilmar International Ltd. – The world’s largest palm oil trader and refiner, with extensive operations across Asia and Africa.

These companies represent a mix of multinational corporations and regional powerhouses driving innovation, sustainability, and market expansion in the palm oil sector.

Market Challenges

Despite the promising outlook, the palm oil market faces several challenges:

• Environmental and Sustainability Concerns : Deforestation, habitat destruction, and greenhouse gas emissions from peatland clearing remain major issues affecting the industry's reputation.


• Regulatory Pressures in Importing Countries : European Union restrictions on palm oil-based biofuels and increased scrutiny of sustainability certifications are reshaping trade dynamics.


• Land Rights and Labor Issues : Conflicts over land ownership and labor rights in producing countries continue to attract criticism from NGOs and consumers.


• Price Volatility : Palm oil prices are subject to fluctuations due to weather patterns, geopolitical events, and changes in government policy.


• Competition from Alternative Oils : Soybean, sunflower, and rapeseed oils are gaining traction in certain markets due to health and sustainability perceptions.

Looking Ahead

As the palm oil market moves forward, it will continue to evolve in response to shifting consumer preferences, regulatory frameworks, and technological advancements. The future of the industry hinges on the widespread adoption of certified sustainable palm oil (CSPO) , traceability improvements , and environmentally responsible land management practices .

Emerging markets in Africa and Latin America offer new opportunities for expansion, particularly as local governments seek to boost rural economies and reduce reliance on imported oils.

In conclusion, the global palm oil market is poised for steady growth over the coming decade. By addressing current challenges and leveraging ongoing innovations, the industry can ensure that palm oil remains not only a vital commodity but also a sustainable and responsibly produced resource —supporting food security, economic development, and environmental stewardship worldwide.