Indonesia's prohibition on palm oil exports raises concerns about global food costs

[ASEAN NOW Content Team]

 

Every country will suffer, according to experts, as the world's largest producer of palm oil restricts exports of the commodity used in food, cosmetics, and cleaning products.

Experts have predicted that the price of edible oils such as soyoil, sunflower oil, and rapeseed oil will rise as a result of Indonesia's unexpected restriction on palm oil exports.

Due to bad weather and Russia's invasion of Ukraine, major edible oils are already in low supply.
The decision by Indonesia to halt exports will put more strain on cost-conscious customers in Asia and Africa who are already dealing with rising fuel and food prices.

 

According to James Fry, chairman of commodities consultant LMC International, "Indonesia's decision affects not only palm oil availability, but vegetable oils worldwide."

 

Palm oil, which is used in everything from cakes and frying fats to cosmetics and cleaning goods, accounts for about 60% of global vegetable oil shipments, with Indonesia accounting for roughly a third of all exports.

It announced the export embargo on April 22nd, which would be in effect until further notice, in order to combat growing domestic prices.

 

"This is happening at a time when all other major oils' export tonnages are under strain: soya bean oil due to droughts in South America; rapeseed oil due to terrible canola crops in Canada; and sunflower oil due to Russia's assault on Ukraine," Fry explained.

"No one can substitute for the loss of Indonesian palm oil," stated Rasheed JanMohd, chairman of the Pakistan Edible Oil Refiners Association (PEORA).
Every country will be affected."

 

Prices for vegetable oils have already climbed more than 50% in the last six months as a result of causes ranging from labour shortages in Malaysia to droughts in Argentina and Canada, the two largest producers of soyoil and canola oil, respectively.

Buyers had hoped that a strong sunflower crop from top exporter Ukraine would alleviate the shortage, but supplies from Kyiv have ceased as a result of Russia's invasion.

This had led importers to believe that palm oil would be able to fill the supply shortfall until Indonesia's surprise embargo hit purchasers with a "double punch," according to Atul Chaturvedi, head of the Solvent Extractors Association of India (SEA).