America Is Eating More Palm Oil

The U.S. vegetable oil market is entering a strange and increasingly important phase that deserves far more attention than it currently receives. According to the latest USDA vegetable oil projections analyzed in my recent report, food use of palm oil in the United States continues to trend higher even as domestic soybean oil and Canadian canola are increasingly absorbed into renewable diesel and biofuel markets.

At first glance, this may sound like a niche agricultural story. It is not. This is a much larger structural shift involving energy policy, food manufacturing economics, consumer diets, and the growing competition between food and fuel markets. Palm oil consumption in U.S. food applications has steadily expanded over the past several years. USDA projections show U.S. food use of palm oil rising from approximately 1.3 million metric tons in 2021/22 to more than 1.5 million metric tons by 2026/27. Palm oil’s share of total U.S. food vegetable oil consumption also continues to edge higher over time, even as overall edible oil demand growth remains relatively modest.

The numbers themselves are important, but the underlying reason behind them matters even more. Palm oil is not growing because Americans suddenly embraced traditional palm-based cooking, the way many consumers across Southeast Asia or Africa have for generations. Palm oil’s expansion in the United States is overwhelmingly tied to the production of ultra-processed foods. Palm oil is extremely attractive to food manufacturers because it is cheap, shelf-stable, semi-solid, and highly versatile. Following the gradual removal of partially hydrogenated oils and trans fats from the U.S. food system, palm oil became one of the easiest replacement ingredients across a wide range of packaged foods.

Today, it is difficult to walk through a grocery store without encountering palm oil, palm kernel oil, or seed oil somewhere on the label. Snack foods. Frozen meals. Cookies. Crackers. Granola bars. Microwave popcorn. Chocolate spreads. Coffee creamers. Peanut butter spreads. And increasingly, products are marketed as “healthy,” “high protein,” or “convenient”. This is where the broader contradiction in the U.S. vegetable oil market begins to emerge.

At the same time, as palm oil food consumption continues to expand, the United States is rapidly increasing industrial demand for soybean oil and canola oil through renewable diesel expansion and biofuel mandates. USDA projections show that industrial vegetable oil demand in the United States will accelerate sharply into 2026/27, driven by expanded Renewable Fuel Standard obligations and growing renewable diesel capacity. Soybean oil remains the dominant feedstock, while Canadian canola is becoming increasingly important in balancing U.S. feedstock needs. In practical terms, more domestically produced edible oils are increasingly being pulled into energy markets. Food manufacturers then adapt around those shifts through reformulation, ingredient substitution, and sourcing alternatives that maintain cost competitiveness and shelf stability.

Palm oil fits that role extremely well. This does not mean palm oil itself is inherently “bad.” Palm oil is one of the world’s most widely consumed vegetable oils and remains deeply integrated into traditional cooking systems across many parts of Asia and Africa. Like most foods and ingredients, moderation matters far more than internet slogans surrounding “good” or “bad” oils. The larger issue in the United States is the overwhelming dominance of ultra-processed foods within the modern food system. Palm oil simply becomes one of the most visible ingredients inside that broader trend. At the same time, the United States is experiencing record interest in GLP-1 medications, high-protein diets, fitness culture, and “health optimization.” Consumers increasingly want healthier lifestyles, yet grocery store shelves remain dominated by inexpensive, calorie-dense processed foods built around industrial food economics.

That contradiction is becoming increasingly difficult to ignore.

What makes the situation particularly interesting is how differently Europe is evolving.

The European Union is gradually reducing its dependence on palm oil in both food and industrial applications while preserving greater shares of sunflower oil, rapeseed oil, and olive oil for food consumption. Meanwhile, the U.S. vegetable oil system is becoming increasingly tied to fuel policy, carbon incentives, and renewable diesel economics.

Two developed economies.

Two very different policy directions.

And vegetable oils now sit directly at the center of that divergence.

Explore more details in my latest report available for purchase: “The Great Vegetable Oil Divide: Why Europe Eats Oils While America Burns Them.”

U.S. Vegetable Oils Share in Food Consumption between 2024/25 and 2026/27 forecast. Donut chart.