Oil Crops: A Global Story Of Food And Fuel

• Oil crops serve both dietary and industrial needs, shaping and reflecting global economies
• Sustainability concerns drive both supply and demand of oil crop markets, via production practices and renewable fuel policy, respectively

Global production of oil crops varies dramatically by region, with palm dominant in Asia and Africa, soybean in the Americas, and sunflower seed and rapeseed in Europe. As designated by the USDA, the term oilseed refers to the oil-rich seed of a plant – for example, a soybean or a rapeseed. Seed oil refers to the oil extracted from an oilseed.

While oilseed and seed oil production can align by country or region, differing distribution of oilseed and seed oil production occurs when a country does not crush or process the oilseeds it grows. China, for example, is currently the world’s foremost producer of soybean oil, but for the most part, does not grow its own oilseeds, relying predominantly on North and South American imports to sustain its domestic crushing industry. Soybeans are generally exported whole to be crushed at their destination, while palm oil is more often produced near to production.

Seed oils have both dietary and industrial applications, with distribution favoring one or the other dependent on national policies. Asia and the Pacific is projected to produce the narrow majority of all global seed oil in the upcoming marketing year, at nearly 116 million metric tons (MT). Mirroring the global profile, palm is the dominant species of seed oil in Asia, with soybean second. Palm is the primary seed oil consumed in Africa, the historical origin of the plant.

Oil crops have been historically used for human and animal consumption, with seed oils foundational to diets across the globe. What olive oil is to Italian cuisine, sunflower oil is to the Russian kitchen and palm oil to the Ghanaian? In recent decades, however, seed oils have taken on a new life as the primary input to biofuels, where they again display regional differences in prevalence. The Renewable Fuel Standard (RFS) has been a major motivator for use of soybean oil since its codification in 2007, while its European counterpart Renewable Energy Directive (RED) has pushed the use of rapeseed in European biofuels. National legislation in Indonesia mandating the use of biodiesel, all the while, incents the domestic production of palm oil.

Examining the production landscape of conventional oilseeds (including palm kernel but excluding palm), one point becomes most apparent: soybeans are king. Each year for the last three (plus) decades, soybeans have comprised the plurality of global oilseed production; growing from 104 million MT in 1990/1991, to over 422 million MT total in the 2024/2025 marketing year.

Soybean oil shares importance with another byproduct of the soybean crushing process: soybean meal. When a bushel of soybeans weighing 60 pounds is crushed, the conventional result is 11 pounds (18%) of soybean oil and 44 pounds of soybean meal, which is used as a high-protein animal feed, buoying pork and poultry production around the world. While nearly one third of soybean oil is produced in East Asia and the Pacific, the wide majority of the soybeans used to produce that soybean oil is imported. China, the world’s largest soybean crusher, imports most of its raw materials, with the United States and Brazil as its primary import origins.

Although palm oil became known to many Americans only in the last decade as deforestation in Latin America and Southeast Asia became more publicized and the 2018 FDA ban on partially hydrogenated oils left U.S. packaged food producers searching for alternatives, the oil has been a dietary staple for much of the world for centuries. In terms of global seed oil production today, palm oil takes the cake, due in large part to the staggering yield of the palm oil plant. The palm plant produces two types of oil: palm kernel oil, which is produced from crushing the kernel in the middle of the fruit, and palm oil, which is produced by effectively juicing the soft palm fruit and is more abundant than palm kernel oil. Oil palm trees are indigenous to Africa, having spread globally only in the 20th century, overtaking coconut oil in many Asian diets.

The USDA Foreign Agricultural Service projects that in the 2024/2025 marketing year, roughly 80 million MT of palm oil will be produced globally, with nearly 89% coming from East Asia and the Pacific. Soybean oil ranks second in global production, over 50% of which comes from the Americas. Palm oil has obtained dominance in recent decades due to the abundant yields of the palm oil tree: the product comprises 40% of global vegetable oils using only 6% of oil crop land, according to the World Wildlife Fund. Indonesia is the world’s foremost producer and consumer of palm oil, having implemented a gasoline blending mandate of 35% biodiesel, which is primarily locally produced from palm oil, for all internal combustion vehicles. Producing less than half of that of Indonesia, neighbor Malaysia comes in second among global palm oil producers.

Despite its efficiency, deforestation for new palm growth has been significant (with deforestation for farmland in the United States, for example, generally considered to have taken place too long ago to be criticized presently). Compounding the effects of deforestation, the practice of “slash and burn,” leaves many fields smoldering, heightening the release of carbon. According to Bloomberg, land use change to accommodate palm oil production in Indonesia and Malaysia emits roughly 500 million tons of CO2 equivalent annually, comprising 1.4% of global net CO2 emissions.

In response to unfettered palm expansion, the Roundtable on Sustainable Palm Oil has established protocols to guide sustainable practices, which they estimate comprise 19% of global production. Additionally, CME Group’s cash-settled USD Malaysian Crude Palm Oil futures and options contracts (CPO, POO, CPV, POX, POG) are based on the Bursa Malaysia Derivatives Crude Palm Oil Futures (“FCPO”) contracts, which require all physical delivery to be Malaysian Sustainable Palm Oil (“MSPO”) certified.

Whether as a staple in national diets or as a primary feedstock to biofuel production, plant-based oils remain integral to both local economies and the broader global agricultural framework. Moving forward, sustainable practices, technological advancement, and environmental and energy policy will be key in shaping the future landscape of oil crops.

Tags: Production, rapeseed, palm oil, Africa, oil crops, consumption, palm, sunflower seed, Asia, soybean oil, seed oil, soybeans, Europe