After the Indonesian government stated last week that all crude palm oil exports would be banned, a cooking oil crisis sparked by the Russian-Ukrainian war is now roiling both local politics and the global supply chain (CPO).
While the export ban was expected to affect worldwide supplies, the cooking oil crisis in Indonesia has taken a political turn, with a member of the country’s major ruling party alleging that the situation is tied to plans to extend President Widodo’s tenure, reports the Jakarta Post.
Palm oil is the most frequently used vegetable oil on the planet, and it’s used in everything from cookies to margarine to laundry detergents to chocolate. Ferrero Rocher chocolates and Nutella also spread use palm oil to give them a smooth texture and a longer shelf life. Cakes, frying oil, cosmetics, and cleaning goods all include this ingredient.
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, soy oil, sunflower oil, and rapeseed oil. Higher fuel and food prices will put additional strain on cost-conscious consumers in Asia and Africa.
The unexpected palm oil export embargo drove buyers to seek alternatives, which are already in limited supply, global edible oil consumers have no choice but to pay the highest price for supplies.
This is occurring at a time when all other major oils’ export tonnages are being strained: soybean oil owing to droughts in South America; rapeseed oil due to terrible canola crops in Canada; labor shortages in Malaysia; droughts in Argentina; and sunflower oil due to Russia’s conflict on Ukraine.
Importers like India, Bangladesh, and Pakistan will try to expand their palm oil purchases from Malaysia, but the world’s second-largest palm oil producer will not be able to fill the void left by Indonesia, according to Chaturvedi, president of trade body the Solvent Extractors Association of India (SEA).
