Indonesia lifts Palm Oil ban after considering improvements in domestic supply and prices
Indonesian President Joko Widodo said on Thursday that Indonesia will relax its restriction on palm oil exports on Monday, citing improvements in local cooking oil availability. Indonesia’s prohibition, in effect since April 28, was one of the most significant acts of agricultural protectionism since Russia’s invasion of Ukraine, which halted sunflower oil shipments.
Palm oil accounts for more than a third of the global vegetable oil market, with Indonesia accounting for over 60% of palm oil supply. To try to control rising domestic cooking oil costs, the world’s largest palm oil producer had suspended shipments of crude palm oil (CPO) and several derivative goods.
According to cargo surveyors, Malaysia’s palm oil exports to India and China, the two largest purchasing countries, fell in the first half of May, despite total shipments increasing. Both nations’ demand has been limited by high pricing, with China’s position aggravated by severe Covid lockdowns.
The ban jolted global vegetable oil markets, which were already reeling from the loss of a large portion of their supplies due to the conflict in Ukraine. It was lifted when hundreds of farmers protested, claiming that their earnings had suffered as prices for their fresh fruit bunches plummeted.
According to a recent poll, President Jokowi’s popularity rating was at its lowest in more than six years, owing to Indonesians’ growing displeasure with rising costs. However, President Jokowi stated that he is optimistic that local cooking oil costs would fall within a few weeks. The government plans to tighten laws and processes for its palm oil export funds in order to be more responsive to local supply and pricing.
After the prohibition was lifted, the Indonesian rupiah rose 0.47% and the Jakarta stock index climbed roughly 1.75%. “The export ban has shown Indonesia how important palm oil is for the country,” said Gulat Manurung, chairman of the Indonesian smallholders’ group APKASINDO.
