By Eko Listiyorini and Anuradha Raghu and Rieka RahadianaBloomberg Posted on Apr 27, 202227 Apr 2022 Indonesia, the world’s largest shipper of edible oils, will extend its export ban to include crude palm oil, heightening uncertainty in a market that has experienced dizzying price fluctuations and threatening to exacerbate global food shortages. The ban will be extended to crude palm oil, RBD palm oil and used cooking oil, Coordinating Minister for Economic Affairs Airlangga Hartarto said in a statement on Wednesday. A day earlier, he said the cut would only apply to the palm oil. The policy will start on April 28 and will last until the prices of domestic cooking oil ease. Indonesia’s export policy has brought the palm oil industry to a standstill. Prices have been falling for a while, as the lack of details from the initial statement made traders fear that the ban would cover all products and then fall the next day as details emerged that traffic would be limited to some refined products. Futures contracts increased by 10% shortly before the last announcement. It is another example of a political upheaval that has raised concerns about Indonesia’s business image. The country is a major supplier of goods and has imposed restrictions on nickel and coal exports in the past. Speculation about what Indonesia might do next keeps the industry vigilant. Palm oil is processed and shipped in various forms. The fleshy, red fruits of the palm oil are crushed to produce crude palm oil. The product can be refined, discolored and deodorized to remove impurities. Further processing produces finicolain, which is the most widely used cooking oil in the world. Inedible oils are used to make biodiesel and soap. Indonesia’s move, which accounts for a third of world edible oil exports, adds to a range of crop protection around the world since the Ukraine war broke out as governments try to protect their own food supply with agricultural prices to rise. The ban threatens to further support food inflation, which is skyrocketing, and increases the risk of a full-blown hunger crisis. “We are now entering a new rising era where edible oil shortages will increase worldwide,” said Abdul Hameed, Manzoor Trading Sales Manager in Pakistan. “Many countries will have to rely on their own crops and use domestic resources. “There could be more crop protection.” Local shortages of edible oils have upset Indonesia, leading to street protests over high food prices and the arrest of a trade official in a corruption case. The unrest has become a major political issue for President Joko Widodo, as the cost of cooking oil could push other food prices higher ahead of Eid al-Fitr, which is usually marked by festivities and celebrations. “Once the local need is met, I will definitely lift this export ban because I understand how the government needs taxes, it needs profits from abroad and it needs a trade surplus,” said the president, known as Jokowi. “The need of the people is a more important priority.” Futures for July delivery had risen above the 10% trading threshold in Kuala Lumpur earlier, before closing at the highest level since March 9. The market expanded its gains during the night session, climbing up 2.1%. Soybean oil, the palm’s closest rival, jumped up 4% to a new record in Chicago. – With the help of Grace Sihombing.
