In a shocking move for the palm oil industry, Indonesia will effectively ban palm oil exports beginning April 28 and continuing until further notice. President Joko Widodo on Friday had announced to ensure the availability of food products for domestic use.
He further said, “I will monitor and evaluate the implementation of this policy so availability of cooking oil in the domestic market becomes abundant and affordable.”
Indonesia accounts for more than half of the global palm oil supply. Moreover, since 2018, the country has stopped issuing new permits for palm oil plantations. The palm oil industry association, GAPKI, has asked the government to revaluate the ban.
In Indonesia, the retail price of cooking averages out at 26,436 rupiah per litre, which is up by 40%. Moreover, in some provinces, the oil prices have doubled in the past month. While the government has set a cap of 14,000 rupiahs per litre for bulk cooking oil, the trade ministry says it hovers at 18,000 rupiahs this month.
After the announcement was made, the US soy oil futures jumped more than 3% to an all-time high of 84.03 cents per pound. Atul Chaturvedi, the president of trade body the Solvent Extractors Association of India (SEA), told Reuters that the move will hurt consumers.
The global prices of palm oil have surged dramatically this year amid high demand and a weak output from Malaysia and Indonesia.
Furthermore, the global edible oil prices became volatile after Russia invaded Ukraine. The invasion further disrupted the supply of sunflower oil.
References: Deccan Herald
Featured image source: The Economic Times