Market Outlook

Soybean oil has long been a major component of the consumer, industrial and commercial vegetable oil complex, but as end-user preferences have shifted, a market for an oil with a desirable fatty acid composition has developed. Previously, that market relied mostly on canola or cottonseed oil, but preferences are changing. After years of research and field testing funded by the U.S. Soybean Checkoff, food companies are poised to increase demand with high oleic soybeans.

The global cooking oil market, of which soybean oil is a major component, is expected to continue the demand surge that’s been underway for years. According to Zion Market Research the worldwide cooking oil market was valued at more than $85 billion in 2017, and that’s expected to exceed $130 billion by 2024, with annual growth of more than 6%.

The USDA Foreign Ag Service says worldwide vegetable oil production from various oilseeds has grown from 188.41 million metric tons (MT) in 2016-17 to a projected 213.9 million MT in the 2021-22 marketing year. Soybean oil currently accounts for nearly 29% of total worldwide vegetable oil production, with U.S. soybean oil holding a 6% share of the world market. When whole soybean exports destined for overseas crush facilities are factored in however, that total jumps to nearly 11% of the worldwide total vegetable oil market from United States-produced soybeans.

That share can continue escalating and it is poised for growth here at home. There is a market in the United States for homegrown soybeans that provides a great opportunity for U.S. soybean farmers to build and maintain a premium market. There is domestic demand, it’s growing, and it promises to grow in the future.

The Asia Pacific dominated the Soybean Oil market in 2019 with a share of more than 44.12%, followed by North America owing to the increasing demand for Soybean oil for cooking purposes in a household. Increasing urbanization and the rise in the number of health-conscious consumers is increasing the growth of the soybean oil market in this region.

However, North America is estimated to grow at a higher compound annual growth rate (CAGR) during the forecast period 2020-2025 owing to the rising disposable income and an increase in the fermentation and drilling process. Increasing demand for soybean oil in the preparation of sauces, dressing, non-dairy creamers, whipped toppings and increasing usage of soybean oil in fighting against conditions such as obesity, high cholesterol and cardiovascular disease is increasing the growth of the soybean oil market in this region.

Source: Industry ARC; Soybean Oil Market – Forecast (2021 – 2026)

Consumers prefer the flavor and health benefits with minimal trans-fatty acids (TFA) and saturated fat. Normally, the two are mutually exclusive; whenever hydrogenating a cooking oil source, TFAs decline but saturated fat and oxidative instability rise, as do adverse health effects of consuming partially hydrogenated oil, like increased risk of heart disease, stroke, and type-2 diabetes.¹

This is where the real opportunity is for U.S. soybean farmers with high oleic soybean production to build, maintain, and grow a market with specifically desirable traits food processors, chefs and consumers prefer.

At the same time, cooking oil made from High Oleic (HO) soybeans with low linolenic acid levels perform on par with conventional cooking oils from a shelf-stability standpoint, while low linolenic acid contents contribute to improve shelf stability and long-term viability of the finished oil product.

Once food companies discovered the value of HO soybeans, the fundamental changes necessary for them to begin manufacturing products with HO soybean oil didn’t happen immediately. That transition — one that’s taken five to seven years for many food manufacturers to adjust procedures, equipment and other components of the entire process — is nearing its end. 

Companies that eliminate TFAs in products are ready to begin using HO soybean oil. The marketplace is poised to connect growers and processors to these end-users and their consumers. And now, the production side of the supply chain is almost a decade into developing the infrastructure and systems to deliver. 

With a growing market base in the United States, there is added benefit to American soybean farmers. U.S. producers have an opportunity to supply a stable and growing domestic market at U.S.-based crush facilities. This means this localized market is less susceptible to foreign competition and potential international trade disputes because the market is U.S. based and relies on U.S. produced crops. The soybeans are grown, processed, and sold to consumers right here at home. 

High oleic soybeans now represent the impetus for vegetable oil that’s the best of both worlds for the consumer. With limited seed supply in 2021, acreage increases are required to meet demand in 2022 and beyond.²

¹ Industry ARC; Soybean Oil Market – Forecast (2021 – 2026)

² Staying Ahead of the High Oleic Soybean Curve Feed&Grain Webinar, March 17, 2021

This content is an excerpt of the High Oleic Soybean Oil: The Business and Agronomic Case to Meet Growing Demand white paper, Jan. 2022.