Indonesia, the world’s largest producer and exporter of palm oil, announced it will lift its recent ban on palm oil exports in a move that will bring relief to the global market.
Palm oil exports will resume on May 23 after being imposed on April 28. Gro has been predicting that the move would be short-lived as the country’s limited storage infrastructure would force a halt to the ban.
Prices for palm oil, the most widely used edible oil, fell about 2% at the opening of the Malaysian Bourse night-trading session. Still, palm oil prices are up 36% from this time last year. Soybean oil futures prices have been trading near record highs, and are up 21% from a year ago. Edible oils are often interchangeable, so a shortage of one type exerts pressure on the others.
Palm futures prices should continue to see downward pressure leading up to November on higher seasonal production in both Indonesia and Malaysia, the No. 2 producer and exporter. Labor shortages, which restrained production during COVID, have eased. Global demand also has eased as high palm oil prices curtail discretionary demand.
Malaysia’s palm oil end-of-April stocks were up 11.5%, with exports down nearly 18%. Shipments to China, India, and the EU slowed.
Overall, however, global supplies of vegetable oils remain tight, helping to maintain a floor under prices, in part due to the Russia-Ukraine war halting shipments of sunflower oil from the Black Sea region.
Indonesia’s palm oil export ban was one of the largest protectionist measures governments worldwide have enacted to stabilize domestic food prices as concerns about food shortages reverberate around the world.
Indonesia’s export restrictions, intended to protect the local market, helped reduce domestic cooking oil prices since the start of the ban by about 12% to between 17,200-17,600 rupiah per liter, the government said. Previously, the government had said it wanted prices to drop to about 14,000 rupiah/liter.