Edible Oil Prices Rise as War, El Niño and Biofuel Policies Hit Global Food Markets

Global food prices are witnessing renewed pressure, with vegetable oils emerging as one of the worst-affected commodities amid the combined impact of the Russia-Ukraine war, El Niño weather conditions and aggressive biofuel blending mandates adopted by major producers such as Indonesia.

The Food and Agriculture Organization (FAO) of the United Nations said its benchmark food price index averaged 136 points in September, the highest level since November 2022. The index tracks international prices of a basket of food commodities, with the 2014-16 average set at 100.

Vegetable oils have recorded an even sharper increase. The FAO vegetable oil price index stood at 198.6 points in September, up 18.3 per cent from September 2025 and the highest level since June 2022, when it reached 211.8 points.

The index had touched an all-time high of 251.8 points in March 2022, soon after Russia's invasion of Ukraine triggered major disruptions in global commodity markets. As the initial supply shock eased, prices declined to 115.8 points by June 2023. However, prices have risen again over the past year amid fresh supply and demand pressures.

A key factor behind the renewed increase is the growing use of vegetable oils for biofuel production. Oils such as palm, soybean and rapeseed can be converted into Fatty Acid Methyl Esters (FAME) through transesterification, a chemical process involving vegetable-oil triglycerides and methanol in the presence of a catalyst.

The expansion of biofuel mandates by major producing countries, particularly Indonesia, has increased the diversion of edible oils towards fuel production. This can tighten supplies available for food consumption and add to price pressures.

The developments highlight the vulnerability of global food markets to the interaction of geopolitical conflicts, climate-related disruptions and energy policies, with edible oils particularly exposed to these competing demands.