Oilseeds Market Analysis

Oilseeds Market Deep Dive – PESTLE, Porter, SWOT

Oilseeds constitute an important element of the agricultural world, and are a source of food oil, of meal for the animal, and of various industrial products. As the demand for these products has changed, with the growth of the population and the increasing demand for healthful food and the demand for sustainable exploitation, the world market for oilseeds has been transformed. The various factors, climate, technical progress, and political changes, have influenced the production and the trade of oilseeds, and have thus made the situation of the different players more complex. In addition, the increasing interest in biofuels and in the use of renewable energy sources has changed the market further, as the potential of oilseeds is more and more recognized. The interplay of these various factors is a matter of great importance for the players in the industry, who wish to take advantage of the emerging opportunities.

PESTLE Analysis

• Political:
  In 2024, the oilseeds market is heavily influenced by government policies aimed at promoting sustainable agriculture. For example, the U.S. Department of Agriculture has allocated $1.5 billion to implement the Sustainable Agriculture Research and Education program, which includes initiatives to promote oilseeds research. Trade policies also affect the market. For example, the U.S. has imposed tariffs on certain imported oilseeds, which has affected import volumes. For example, in 2023, imports were estimated at 2.3 million metric tons, a reduction from the previous year as a result of these tariffs.
• Economic:
  The prices of the oilseeds are subject to the fluctuations of the general world economy. In 2024, the average price of soya oil is estimated at a penny a pound, influenced by both the supply of this product and the demand for biodiesel, which in 2023 accounted for about 30 per cent of the total consumption of soya oil in the United States. In 2024, world production of oilseeds is estimated at 600 million tons, Brazil and the United States being the two major producers, supplying respectively 40 per cent and 30 per cent of the total.
• Social:
  The oil-seeds market is influenced by changing preferences towards healthier and more sustainable food. In the United States, it is estimated that by 2024, 45% of consumers will actively seek out products made from non-GMO oil-seeds, which is in line with the growing demand for organic and natural foodstuffs. In the food industry, a quarter of the new products launched in 2023 contained oil-seeds, which shows the rising demand for vegetable oils in food formulations.
• Technological:
  Advances in agricultural technology are playing an important role in the oilseeds market. In the United States, by 2024, it is expected that the use of precision agriculture will increase yields by up to 20 percent. By that time, precision agriculture will be used by about half of the oilseeds farmers. In addition, genetic engineering has led to the development of high-yield and pest-resistant varieties of oilseeds, and the government will allocate $300 million in research and development by 2023, to increase the productivity and sustainability of oilseeds farming.
• Legal:
  The regulatory frameworks for the oil-seed market are becoming more stringent, particularly in terms of food safety and the environment. In 2024 the European Union will impose a new rule requiring that all imports of oil-seeds meet certain criteria of sustainable development, which will affect about 1.2 million tons of the 1.8 million tons it imports each year. The cost of complying with these regulations is expected to rise by 15 per cent, as importers adjust to the new standards.
• Environmental:
  The oilseeds market is increasingly affected by the growing concern for the environment, especially for deforestation and the loss of bio-diversity. It is estimated that in 2024 oilseeds cultivation will account for about ten per cent of the total deforestation of the earth, and the result is that initiatives are being taken to encourage more sustainable agriculture. The Roundtable for Sustainable Palm Oil has announced that by now about thirty per cent of palm oil producers have been certified as being in compliance with the sustainable production criteria, and this is a clear indication of the increasing concern for the environment within the industry.

Porters Five Forces

• Threat of New Entrants:
  Oilseeds market has medium-sized entry barriers, due to the need for considerable capital investments in equipment for production, in the production and distribution of oil seeds. Furthermore, the existing companies enjoy economies of scale and brand loyalty, which are also barriers to new entrants. However, the growing demand for oil seeds, which is driven by the trend towards healthy eating and the production of biofuels, may attract new competitors.
• Bargaining Power of Suppliers:
  The high-oil-seeds market is dominated by a small number of large producers of key inputs, such as seeds and fertilizers. In regions where certain varieties of oil-seeds are grown, this concentration of suppliers gives them a significant influence on prices and terms of trade. And fluctuations in the prices of raw materials can increase their power even further.
• Bargaining Power of Buyers:
  The buyers of oilseeds in the market, food manufacturers and biofuel producers, have moderate power in the market. There are many suppliers, but buyers often seek good quality and are willing to change suppliers if prices rise significantly. However, the demand for oilseeds in many industries gives the suppliers some power.
• Threat of Substitutes:
  The threat of substitutes in the oilseed market is moderate, because there are other sources of fats and oils such as animal fats and vegetable oils. But the special properties of oilseeds, including their nutritional value and versatility, limit the extent to which substitutes can replace them in certain applications.
• Competitive Rivalry:
  The competition in the oilseeds market is strong, with many players competing for market share. The leading companies compete on price, quality and innovation, which gives rise to aggressive marketing and continuous improvement in production methods. Competition is further intensified by the presence of both large, international corporations and smaller, regional companies.

SWOT Analysis

• Strengths:
  • High demand for oilseeds in food and biofuel industries.
  • Diverse applications across various sectors including food, cosmetics, and pharmaceuticals.
  • Established supply chains and infrastructure for oilseed processing.
• Weaknesses:
  • Vulnerability to climate change and extreme weather conditions affecting crop yields.
  • Dependence on a limited number of major oilseed crops, such as soybeans and canola.
  • Price volatility due to fluctuating global market conditions.
• Opportunities:
  • Growing consumer preference for plant-based oils and sustainable products.
  • Technological advancements in oilseed cultivation and processing.
  • Expansion into emerging markets with increasing demand for edible oils.
• Threats:
  • Intensifying competition from alternative sources of oils, such as synthetic and animal fats.
  • Regulatory changes impacting agricultural practices and trade policies.
  • Potential trade disputes affecting global supply chains.

The Oil Seeds Market in 2024 is characterized by high demand and wide-ranging applications. Moreover, the market is supported by established supply chains. However, the market is subject to the threat of climate change and the volatility of prices. Opportunities for the market include the growing demand for plant-based products and technological advancements. On the other hand, the market is threatened by competition from alternative oils and by regulatory changes. Strategically, the market is characterized by a focus on sustainable growth and market expansion.