Indonesia to lift palm oil export ban from Monday, says President

Indonesia will lift its palm oil export ban from Monday, following improvements in the domestic cooking oil supply situation, President Joko Widodo said on Thursday.

The world’s top palm oil exporter has since April 28 halted shipments of crude palm oil (CPO) and some derivative products to try to tame soaring prices of domestic cooking oil.

The decision comes despite bulk cooking oil having not yet receded to the targeted 14,000 rupiah per litre price, as the government considers the welfare of 17 million workers in the palm oil industry, the president said in a video statement. Jokowi, as the president is known, said the supply of bulk cooking oil has now reached a level greater than what the domestic market needed.

“Average price of (bulk) cooking oil before the export ban in April was 19,800 rupiah per litre and after the ban the average price dropped to around 17,200 to 17,600 rupiah per litre,” he said.

Indonesia came up with the ban on exports of the widely used vegetable oil as a means of controlling domestic prices, but pressures have been mounting for it to be eased as farmers protested that there were no demand for their palm fruits. The ban has rattled global vegetable oil markets that were already struggling after the war in Ukraine removed a big chunk of sunflower oil supply.

The government has struggled to control prices and secure local supplies since December, with a raft of measures ranging from price caps, to export curbs and cash handouts for households and hawkers. But all that failed to pull down prices to the government target of 14,000 rupiah (97 US cents) per liter of bulk oil. The surging costs helped push inflation to a three-year high in April.

Palm oil makes up more than a third of the world’s vegetable oil market, with Indonesia accounting for about 60% of palm oil supply.

A survey this month showed the approval ratings for Jokowi hit the lowest in more than six years due to Indonesians’ growing discontentment over rising prices.

Soybean oil, a substitute of palm, fell as much as 1.6% after Indonesia’s announcement. Palm oil futures earlier closed 1% lower in Kuala Lumpur.

Jokowi said he’s confident that local cooking oil prices will become affordable in a few weeks’ time. The government will improve regulations and procedures for its palm oil export funds so that it can be more adaptive to domestic supply and prices.

Indonesia’s Palm Oil Association appreciates the government’s decision to lift a palm oil export ban from May 23, as storage tanks were reaching full capacity, secretary general Eddy Martono said on Thursday.

Separately, palm oil farmers union SPKS in a statement said it hopes plantation activities will soon return to normal due to the removal of the ban.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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