Palm oil, Indonesia blocks exports and the price soars

The tender, which will begin on April 28, is an attempt to tackle the shortage in Kuala Lumpur and contain the surge in domestic prices. But the repercussions will be felt on the international agri-food market

Palm oil prices soar after Indonesia announced its intention to ban the export of vegetable cooking oils. The Southeast Asian country is the world’s leading producer of palm oil and occupies 50% of supplies on the global market. The ban was announced last Friday by Indonesian President Joko Widodo to tackle the shortage of cooking oil on the domestic market. It will be effective from next April 28 and will remain in force until the problem is resolved, the authorities specified. The tender will cover shipments of refined, bleached, deodorized palm olein, but not crude palm oil.

Market tensions

This Indonesian move risks giving a blow not only to the international agri-food industry, but also to the production of cosmetics. On Monday, futures for July delivery of pama oil recorded a 6.3% rise on the Kuala Lumpur market. The announcement comes, among other things, at a particularly delicate moment: the current inflation, the war in Ukraine which is giving a drastic halt to the supply of all vegetable oils (WAR IN UKRAINE, THE SPECIAL OF SKY TG24 – LIVEBLOG ) and last but not least the bad weather that this year hit several areas where palm oil and other vegetable oils are produced. The response of the international markets was not long in coming: at the Bursa Malaysia Derivatives Exchange, in Kuala Lumpur, futures on palm oil reached a maximum of 7,500 ringgit (1 Malaysian ringitt is equal to 0.22 euros), with a jump almost 7%, to then close with an increase of 1.47% to 6,972 ringgit.