Fats And Oils Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

Global Fats And Oils Market Trends and Insights

Rising Demand for Processed and Packaged Food

Driven by a focus on functional properties and clean label demands, the processed food industry's evolution is reshaping the fats and oils market. In 2024, U.S. processed food exports hit USD 38.84 billion, with Canada, Mexico, the European Union, Japan, and South Korea as primary markets, as reported by the USDA Foreign Agriculture Service ^{[1]Source: United States Department of Agriculture (USDA), Foreign Agricultural Service, "U.S. Processed Food Products Exports in 2024", fas.usda.gov}. Manufacturers, like Cargill with its 2022 launch of coconut-based pastry margarine, are crafting specialized fats for bakery uses. These fats aim for precise melting profiles and oxidative stability, all while steering clear of trans fats. Such innovations cater to the rising consumer demand for healthier choices, enabling firms to cut down on saturated fats, uphold product quality, and strategically position their products in premium segments by highlighting enhanced functional and nutritional benefits.

Expanding Applications in Biodiesel Production

The biodiesel market is under pressure due to limited feedstock availability, which has caused production to fall short of its capacity. In the United States, 160 biodiesel plants have a combined capacity of 2.7 billion gallons per year, as reported by the Agricultural Marketing Resource Center ^{[2]Source: Agricultural Marketing Resource Center (AgMRC), "Renewable Energy", agmrc.org} . However, this capacity is not fully utilized because of feedstock constraints. To address this issue, companies are turning to alternative feedstocks like waste cooking oils (WCOs), which account for approximately 17 million tons of global supply annually. The industry has introduced advanced pretreatment technologies to improve the quality of degraded oils by reducing their free fatty acid content. These advancements not only make biodiesel production more efficient but also support circular economy practices by repurposing waste materials.

Technological Advancements in Oil Extraction and Processing

Methods like cold-press extraction, supercritical CO2 processing, and enzyme-assisted aqueous extraction are becoming more popular for producing premium oils. These techniques help preserve important compounds such as tocopherols, phytosterols, and polyphenols. According to the American Oil Chemists' Society, cold-pressed sunflower oil showed a 22% higher alpha-tocopherol recovery compared to traditional hexane extraction. This supports claims for products labeled as "virgin" and "unrefined." Additionally, technologies like membrane filtration and molecular distillation are helping to reduce refining losses and energy use. For example, AAK's Karlshamn facility in Sweden achieved a 15% reduction in steam usage per ton of refined oil by using heat integration and enzymatic degumming. These advancements not only lower production costs but also reduce carbon emissions, aligning with corporate sustainability goals and meeting consumer demand for minimally processed ingredients.

Increasing Popularity of Plant-Based Diets

The rising adoption of flexitarian and vegan diets is driving higher demand for plant-based fats in products such as dairy alternatives, meat substitutes, and egg replacers. Coconut oil and shea butter are widely used due to their saturated fat content, which helps recreate the creamy texture of dairy. High-oleic sunflower and canola oils are favored for their neutral taste, making them suitable for plant-based burgers and sausages. According to the U.S. Department of Agriculture, domestic consumption of coconut oil grew by 8% in 2024, with food manufacturers now contributing 65% of the total usage, up from 52% in 2020. Furthermore, oat milk and almond milk producers are incorporating sunflower lecithin and rapeseed oil to enhance emulsion stability and texture. These plant-based ingredients are increasingly replacing traditional dairy fats in coffee creamers and yogurt alternatives.

Fluctuating Raw Material Prices and Supply Chain Disruptions

In April 2025, the FAO oilseed price index rose by 3.7 points (3.5%) compared to the previous month, reaching its highest level in eleven months. Meanwhile, the oilmeal and vegetable oil indices dropped by 1.1 points (1.2%) and 3.7 points (2.3%) respectively. The oils and fats market continues to face significant challenges, driven by factors such as the Russia-Ukraine conflict, which has disrupted sunflower oil supplies, and labor shortages in Malaysia, which have impacted palm oil production. To address these issues, food manufacturers are making adjustments by reformulating products, sourcing oils from different suppliers, and using flexible formulations that allow ingredient substitutions. These ongoing disruptions and supply chain issues are expected to influence market trends and pricing in the near future.

Health Issues Associated with Trans-Fats Consumption

The World Health Organization (WHO) has intensified its efforts to eliminate trans fats globally, leading to significant regulatory changes. So far, 58 countries have implemented strict policies, affecting 47% of the global population. These regulations require manufacturers to replace partially hydrogenated oils (PHOs) with alternatives that can perform the same functions. In the United States, the FDA's final rule, effective December 22, 2023, officially banned PHOs as optional ingredients in food standards. It also revoked previous approvals for their use in products such as margarine, shortening, and bread. This regulatory push has driven innovation in fat structuring technologies. One notable advancement is enzymatic interesterification, which allows the production of trans-fat-free alternatives with specific functional characteristics.

Segment Analysis

By Type: Oils Dominate and Outpace Growth

In 2025, the oils segment held a leading 54.92% share of the market and is expected to grow at a faster pace than the overall market, with a projected CAGR of 5.44% from 2026 to 2031, compared to the market's growth rate of 4.42%. This strong growth is driven by the extensive use of vegetable oils across food and industrial applications, especially in biodiesel production. The importance of this segment is evident from significant investments in processing facilities, such as the upcoming oilseed crushing plant near Perth, Australia, developed by Cargill and CBH Group.

The fats segment, although smaller in market share, is seeing notable progress in the development of specialty products. Manufacturers are focusing on creating fats with specific functional benefits while removing trans fats. For example, in September 2024, Volac Wilmar introduced Mega-Fat 70, a rumen-protected fat product designed for dairy cattle. This product, which contains 70% palmitic and 20% oleic fatty acids, is aimed at improving milk production and supporting cattle health.

By Application: Food Sector Leads While Animal Feed Accelerates

By 2025, the food application segment is expected to dominate the market with a 55.51% share, emphasizing the importance of fats and oils in processed foods. These components play a vital role in enhancing texture, flavor, and shelf-life. Confectionery, bakery, and dairy products are key contributors to this growth, as manufacturers develop customized fat solutions to meet specific functional demands. Advances in enzymatic interesterification technology have made it possible to produce fats with unique crystallization properties, particularly benefiting high-quality confectionery products. The segment's leading position is driven by the essential role of fats and oils in determining the structure and taste of processed foods.

The animal feed segment is projected to grow at the highest rate, with a CAGR of 5.01% during the forecast period of 2026-2031. This growth is fueled by increasing meat consumption in developing regions and the rising use of fats as energy-dense feed components to improve feed efficiency. Meanwhile, the industrial segment is expanding due to the growing demand for vegetable oils in biodiesel production. However, this increased industrial demand creates competition with food applications, which in turn influences market prices.

By Source: Plant-based Dominates Despite Animal-based Growth

In 2025, plant-based sources are expected to dominate the market, accounting for 84.43% of the share, with vegetable oils leading in both food and industrial uses. Palm oil remains a key player in the global oils market, with prices likely to stay high until mid-2025 due to limited supply and growing demand. Cargill's decision to supply only RSPO-certified palm oil from its U.S. refineries highlights the market's increasing focus on sustainable sourcing^{[3]Source: Cargill Incorporated, "Cargill’s U.S. oil refineries connect all customers to 100% RSPO-certified palm oil", cargill.com}. Soybean oil continues to play a significant role, with Ventura Foods—a joint venture between CHS and Mitsui & Co.—using about 2 billion pounds of edible oils annually, primarily soybean oil, due to its affordability and wide availability.

The animal-based segment, which holds 15.57% of the market share, is projected to grow at a CAGR of 6.43% from 2026 to 2031. This growth is driven by the rising recognition of the functional benefits of animal fats in specific applications and their critical role in biodiesel production. Innovations like Volac Wilmar's Mega-Fat 70, designed for dairy cattle, showcase the segment's progress. Additionally, Cargill's acquisition of two meat plants from Ahold Delhaize USA reflects its strategy to expand its animal-based product offerings and improve operational efficiency through better value chain integration.

Geography Analysis

In 2025, Asia-Pacific is expected to hold a dominant 39.89% share of the global oils and fats market. This is mainly due to its strong palm oil production and the growing food processing industry. Indonesia and Malaysia play key roles in shaping global market trends through their palm oil industries. The Malaysian Palm Oil Board predicts that crude palm oil prices will range between MYR 4,000 and MYR 4,300 per ton in 2025. Additionally, Indonesia's upcoming 40% biodiesel blending mandate (B40) is likely to impact the global palm oil supply and keep prices high throughout 2025. In India, Adani Wilmar plans to expand its distribution network to 1 million direct outlets within three years, focusing on rural areas, which highlights the region's improving distribution infrastructure.

The Middle East and Africa are forecasted to grow at the fastest rate, with a 6.74% CAGR from 2026 to 2031, despite having a smaller market share currently. This growth is driven by advancements in food processing, increased biodiesel usage, and rising edible oil consumption. North America and Europe remain key markets. In the U.S., the growing biodiesel industry is boosting demand for vegetable oils. Farmers are increasing canola production to meet renewable fuel needs, supported by investments from energy and agriculture companies in farming and processing infrastructure. In Europe, regulations on trans fats and sustainability are encouraging the development of healthier fat alternatives.

South America continues to play a crucial role in the global supply chain through its soybean oil production, with Brazil's agricultural sector making significant contributions to global exports. Cargill's acquisition of SJC Bioenergia in Brazil strengthens its renewable energy operations, showing the increasing link between renewable energy and the oils and fats market. These regional developments underline the interconnected nature of the global market, where policy changes, such as Indonesia's biodiesel mandates, can have a significant impact on global prices and supply availability.