After Indonesia’s unexpected palm oil export embargo drove buyers to seek alternatives, which were already in low supply due to harsh weather and Russia’s invasion of Ukraine, global edible oil consumers have little choice but to pay top dollar for supplies.
Industry experts believe that the world’s largest palm oil producer’s decision to halt exports effective Thursday will raise prices for all major edible oils, including palm oil, soyoil, sunflower oil, and rapeseed oil. Higher fuel and food prices will put additional strain on cost-conscious consumers in Asia and Africa.
According to James Fry, chairman of commodities consultant LMC International, ‘Indonesia’s decision affects not only palm oil availability, but vegetable oils worldwide.’
Palm oil, which is used in everything from cakes and frying fats to cosmetics and cleaning goods, accounts for about 60% of global vegetable oil shipments, with Indonesia accounting for roughly a third of all exports. It announced the export ban on April 22nd, and it will remain in effect until further notice, in order to combat growing domestic prices.
‘This is happening at a time when all other major oils’ export tonnages are under pressure, including soybean oil owing to droughts in South America, rapeseed oil due to poor canola crops in Canada, and sunflower oil due to Russia’s assault on Ukraine,’ Fry explained.
Prices for vegetable oil have already climbed by more than 50 percent in the last six months due to a variety of issues ranging from labour shortages in Malaysia to droughts.
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