Indonesia Allows Some Palm Oil Exports After Ban, Sends Prices On Rollercoaster
Palm oil futures slid Monday after Indonesia’s export ban on cooking oil last Friday will not be as strict as previously feared.
On Friday, Indonesia, the world’s largest palm oil producer, announced an export ban of all cooking oil and palm oil products beginning April 28. However, those who are in the know told Bloomberg that bulk and packaged RBD palm olein, a highly refined form of palm oil used in cooking and baking, will only be subjected to the ban.
People familiar with the matter said exports of crude palm oil and RBD palm oil will still be available for export. RBD olein accounts for nearly 40% of Indonesia’s total palm oil exports.
Palm oil for July delivery soared as much as 9% last Friday to 6,800 ringgit a ton and has since given up all gains and some.
Friday’s announcement came as a shock to many traders. One trader said, “news will certainly create mayhem.”
“Details are still scant for now, and traders are reacting on speculation that the impact of the Indonesian ban may be less than initially thought,” David Ng, senior trader at IcebergX Sdn. in Kuala Lumpur, said on Monday. It’s a slight relief but still may cause headaches worldwide. A ban on RBD palm olein, primarily used as cooking oils and for industrial frying of processed foods, could continue to tighten supply globally.
The Ukraine conflict has roiled the global edible oil market. The Black Sea region accounts for 76% of world sunoil exports. Indonesia’s move adds to the growing food protectionism as they ensure edible oil supply in domestic markets is ample to mitigate high food prices and inflation riots.
Sathia Varqa, the owner of Palm Oil Analytics in Singapore, said high palm oil prices, high demand, and shortages of edible oils at supermarkets are the reasons the government opted for the export ban on bulk and packaged RBD palm olein products.
Even though the ban is not as worse as previously thought, other parts of the world, such as Europe, have already begun to ration edible oils as the world supplies are quickly dwindling.
Mon, 04/25/2022 – 22:40