From Feed to Fuel: Charting the 20-Year Biofuel Revolution in Palm Acid Oil Usage (2020-2040)

The identity of Palm Acid Oil has fundamentally and permanently changed. For decades, its primary use was straightforward and predictable: it was a low-cost, high-energy ingredient for animal feed and a basic, cost-effective feedstock for soap manufacturing. That era of stability is over. This rapid, volatile shift in its core usage from a simple byproduct to a high-demand commodity has introduced unprecedented uncertainty into the market. This is precisely the kind of dynamic Tradeasia International helps its partners navigate, turning complex oleochemical data and pricing volatility into clear, actionable opportunities for growth.

When Feed Was King: The 2020 Market Baseline

Just a few years ago, the market hierarchy was clear and stable. In 2020, animal feed was the undisputed king, commanding roughly 45% of all global Palm Acid Oil usage. Biofuel was a distant, secondary player, consuming only around 20% of the supply. In that era, it was a true byproduct, defined entirely by its price-sensitive buyers in the feed and soap industries. Its value was capped, almost always trading at a significant 25-30% discount to Crude Palm Oil (CPO), reflecting its status as a lower-tier material. That entire market structure is gone, and all market assumptions from that period are now obsolete.

The Green Energy Takeover: How HVO Changed Everything

The global push for decarbonization has transformed Palm Acid Oil into a high-demand, premium feedstock for renewable energy, specifically Hydrotreated Vegetable Oil (HVO). Because it is classified as a waste/byproduct, it is a prized input for HVO producers seeking to maximize their green credentials. "We've stopped tracking animal feed prices to predict the market," one industry analyst noted. "We now track renewable fuel credits and HVO capacity." Powerful mandates like the EU’s RED III and the US Inflation Reduction Act have supercharged this demand, creating a structural, inelastic pull from refineries. As a result, the biofuel segment is projected to grow at a staggering CAGR of 8.5% through 2040. In stark contrast, the animal feed segment is expected to slow to a crawl at just 2.1%. By 2040, the usage hierarchy will be completely inverted: we project biofuels will account for over 60% of all Palm Acid Oil consumption, while animal feed's share collapses to under 15%. The CPO discount has vanished; Palm Acid Oil is now, definitively, an energy commodity.

Sources:

1. OleochemicalsAsia.com: HVO Demand Continues to Drive Palm Byproduct Prices

2. International Energy Agency (IEA): Global Biofuel Production and Capacity Outlook

3. Straits Research: Palm Acid Oil Market Analysis by Application 2020-2040