Indonesia’s palm oil export ban leaves global buyers with no plan B

April 25, 2022

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MUMBAI-

After Indonesia’s unexpected palm oil export ban, global edible oil buyers are forced to fork out top dollar to get supplies. This is because they have no other options than to look elsewhere.

Industry watchers predict that the decision by the largest palm oil producer in the world to ban exports starting Thursday will raise prices for all major edible oils, including sunflower oil, palm oil, and rapeseed. The increased fuel and food prices will cause additional stress to cost-sensitive consumers in Asia, Africa. Read the full story

James Fry, Chairman of commodities consultancy LMC International, stated that Indonesia’s decision had an impact on vegetable oil availability worldwide.

Palm oil, which is used in everything, from cakes and frying oil to cosmetics as well as cleaning products and cleaning products, accounts for almost 60% of global vegetable oils shipments. Top producer Indonesia accounts approximately for a third of all vegetable oils exports. The ban was announced by the government on April 22, and will remain in effect until further notice. This is to combat rising domestic prices.

“This happens when the export tonnages for all major oils are under strain: soybean oil as a result of droughts in South America; canola crops in Canada that were disastrous; and sunflower oil as a result of Russia’s war in Ukraine.” Fry said.

The factors that have caused vegetable oil prices to rise by more than 50% over the past six months include labor shortages in Malaysia and droughts in Canada. These countries are the largest exporters of soyoil, and canola oil respectively.

Buyers hoped that a large crop of sunflowers from Ukraine, a top exporter, would help ease the tightening. However supplies from Kyiv have ceased due to Russia’s “special operation” in Ukraine.

The importers were able to count on palm oil being able plug the supply gap until Indonesia’s shock ban gave a “double-whammy” to buyers. saidAtul Chaturvedi is president of the Solvent Extractors Association of India.

NO OTHER OPTION

Importers from India, Bangladesh, and Pakistan will seek to increase palm oil imports from Malaysia. But Chaturvedi, the second-largest palm oil producer in the world, cannot fill the gap left by Indonesia. said.

India imports almost half of its palm oil from Indonesia, while Bangladesh and Pakistan import nearly 80%.

“No one can compensate for the loss in Indonesian palm oil.” Each country is going to be affected.” saidRasheed JanMohd is the chairman of Pakistan Edible oil Refiners Association.

Prices of vegetable oils rose to record levels in February after supplies of sunflower oil from the Black Sea region were cut off.

In anticipation of a price drop, oil refiners saw their working capital requirements rise due to the rising prices. As a result, they had lower inventories than normal. saidAn Indian dealer who is associated with a global trading organization.

However, oil prices have risen further.

“Refiners are on the wrong side of history. They cannot afford to wait for weeks. They must make purchases to operate plants,” said the dealer. said.

Since Indonesia allowed loading to continue until April 28, the supply of Indonesian rice will be sufficient for the first half-of-May, but may face shortages in the second half. saidDhaka is home to a refiner.

South Asian refiners won’t release oil slowly into the market because they know there are only limited supplies. said.

India is the world’s largest vegetable oil importer. Palm oil prices rose nearly 5% this weekend due to shortages and industry prices. Also, prices rose in Bangladesh and Pakistan.

Reporting by Rajendra Jadhav. Editing by Gavin Maguire.