Datetime: 2026-01-02 06:25:24 Visit: 7855
Since 2020, the global vegetable oil market has seen structural shifts: their traditional tight price link has weakened sharply, with more frequent and longer-lasting price divergences, marking a changed pattern of how supply-demand shocks impact the market.
As close substitutes accounting for over 60% of the world's edible oil supply, the two oils once moved in tandem with stable price spreads. The key driver of current divergence is differences in production geography and policies: palm oil production is highly concentrated in Indonesia and Malaysia, with more output consumed by domestic food and biodiesel needs. Soybean oil production, centered in the U.S., Brazil and Argentina, is more dispersed and increasingly influenced by national biofuel policies supporting domestic feedstock.
Notable divergence events include: a 2021 surge in U.S. renewable diesel capacity that lifted soybean oil prices far above palm oil; a 2022 plunge in palm oil prices after Indonesia's export ban lift, while soybean oil prices fell more slowly; and subsequent volatility driven by U.S. soybean weather risks and adjustments to biofuel quotas and credits.
Today, the market is more sensitive to regional and policy-specific shocks than global supply-demand factors. Despite being substitutable, biofuel quotas, export restrictions, weather disruptions and domestic market balances can push their prices in opposite directions.
Analysts conclude there is no longer a single global price signal for vegetable oils. Market players-farmers, processors, traders and policymakers-must track both global trends and local drivers (e.g., U.S. biofuel policies, Southeast Asian export rules, crop conditions in major regions). Managing price risk in this new landscape requires a broader, more nuanced approach than before.
