Crude palm oil excluded from Indonesia export ban, Retail News, ET Retail

JAKARTA: Indonesia’s Ministry of Agriculture said on Monday that shipments of crude palm oil would be excluded from a planned palm oil export ban, according to a copy of an official letter sent to government leaders local.

The letter, which was verified by a ministry official, said the ban would however include refined, bleached and deodorized (RBD) palm olein.

It was still unclear on Monday whether products such as RBD palm oil and palm stearin would be affected.

Indonesian President Joko Widodo announced the ban on Friday evening. It will come into effect on April 28.

Jokowi, as the president is known, said on Friday that exports of cooking oil and its raw material would be banned, but did not mention specifics.

Traders were surprised by Jokowi’s announcement that Indonesia, the world’s largest producer of palm oil, was halting edible oil exports to ensure the availability of domestic food products.

Although an exemption of crude palm oil from export restrictions is positive for world markets, the majority of Indonesia’s palm exports are in the form of processed oils which remain affected by the prohibition.

Global edible oil supplies were already stifled by adverse weather conditions and Russia’s invasion of major grain producer Ukraine, and global consumers now have no choice but to pay a high price for supplies at a time when global food inflation has reached an all-time high.

Malaysian benchmark crude palm futures fell 2.09% after news that the ban only covered RBD olein, after jumping nearly 7% to their highest level in six weeks .

“Massive short coverage died out after learning that the ban only affected bulk and packaged olein from Indonesia,” said Paramalingam Supramaniam, director of Selangor-based brokerage Pelindung Bestari. .

He said there are still fears that crude palm oil will be added to the banned list as it is the raw material for RBD palm olein.

According to Refinitiv Eikon, Indonesia exported an average of around 620,000 tonnes per month of RBD in 2021, compared to an average of around 100,000 tonnes of crude palm oil. The main destinations were India, Pakistan and Spain.

The government’s move to rein in stubbornly high cooking oil prices sent shares of its biggest palm oil companies plummeting on Monday, as Asia’s rupee-led currency plummeted.

Dollar-denominated bonds issued by the Indonesian government fell more than 1 cent to their lowest level since the Covid market rout in the spring of 2020.

According to data from the Indonesian Palm Oil Association (GAPKI), processed palm oil exports in 2021 amounted to 25.7 million tonnes, or 75% of total palm product exports. CPO exports were 2.74 million tonnes in 2021, or 7.98% of shipments.

In January and February this year, processed CPO exports accounted for 3.38 million tons, or 79% of exports, while CPO exports were 90,000 tons, or 2% of the total shipped.

World prices for crude palm oil, which Indonesia uses for cooking oil, have reached historic highs this year.

Steve R. Hansen