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Palm oil imports into the European Union continue to fall, with the US Department of Agriculture's Foreign Agricultural Service (FAS) forecasting that the bloc will buy 2.6 million tonnes of the commodity in 2026-27. That would be the seventh consecutive year of declining imports, down from 7.11 million tonnes in 2019-20.
The reductions stem from lower use across the food, feed and biofuel sectors. The report said "consumer concerns about environmental and health impacts have reduced demand for palm oil in food products". It added: "In addition, the European Commission classifies palm oil products as high risk for indirect land use change (ILUC), which limits their use as biofuel feedstock."
Rapeseed oil, or canola, has been one beneficiary of the decline. The FAS report noted that restrictions on palm oil, and ongoing EU discussions about sustainability requirements for other vegetable oils, are strengthening the importance of rapeseed oil in the EU market.
Canada is keen to diversify canola markets away from China. Neil Townsend, senior market analyst at GrainFox, said canola oil-based biodiesel already outperforms its palm oil equivalent thanks to its superior cold-weather performance in northern EU countries. Rapeseed is also grown in member states such as France, Germany, Poland and Romania, creating a vested interest in using the crop.
The FAS forecasts canola imports of 5.8 million tonnes in 2026-27, similar to the current season but well below the 7.96 million tonnes imported in 2024-25, which was needed to offset an EU crop shortfall at the time.
Australia supplied 46% of total EU imports in 2024-25, followed by Ukraine at 34% and Canada at 14%. Trade data show Ukraine and Canada significantly expanded their presence early in the 2025-26 season.
The FAS noted that the EU Deforestation Regulation (EUDR) is another factor that will limit palm oil use. The regulation, due to take effect in December, sets rules for deforestation-linked commodities such as cattle, cocoa, coffee, palm oil, rubber, soy and timber. Palm oil producers and importers have expressed concern about the geolocation and shipment traceability elements, particularly for consignments originating from smallholders.
The report expects a portion of palm oil supply to comply with the new regulation, but volumes will be limited and costly. High saturated fat content and the perceived risk of tropical deforestation also contribute to consumer reluctance, with many EU brands adopting "palm oil free" labelling as a key marketing tool.
Price considerations also apply. Since 2024, palm oil prices have risen markedly and it has lost much of its competitiveness against other vegetable oils. As a result, it has been partly replaced by corn oil in compound feed formulations. The FAS forecasts just 70,000 tonnes of palm oil used for feed in 2027, down from 100,000 tonnes in 2025. Industrial use will also fall to 1.01 million tonnes and biofuel use to 85,000 tonnes over the same period.
Source: The Western Producer