EDITOR'S COMMENT
OILS & FATS INTERNATIONAL
VOL 38 NO 5 JUNE 2022
Bans shake market Indonesia’s surprise decision on 28 April to ban exports of crude and refined palm oil products shook a global vegetable oil market already struggling with shortages of sunflower oil resulting from the Russia-Ukraine war.
EDITORIAL: Editor: Serena Lim serenalim@quartzltd.com +44 (0)1737 855066
Palm oil is both the largest volume and most exported vegetable oil in the world (some 77M tonnes and 50M tonnes respectively), while Indonesia accounts for the most production and exports of this oil (59% and 56% respectively).
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The temporary export ban was introduced as the country struggled to control soaring cooking oil prices against a backdrop of mounting civil unrest. There have been a raft of changing policies in Indonesia since January – from subsidies on packaged and bulk cooking oil; to domestic sales obligations for crude palm oil (CPO) exporters; to raised palm oil export levies and taxes. The government even widened its palm oil export ban from just refined, bleached and deodorised (RBD) palm olein to CPO and other refined products only one day after its initial announcement. The ban – put in place until the domestic bulk cooking oil price dropped to 14,000 rupiah (US$0.96)/litre – was reversed on 23 May as small-scale farmers started to receive less money for their oil palm fresh fruits and stocks built up in storage facilities for a crop that needs to be processed immediately after harvest. The domestic market still remains a priority as the Indonesian government reinstated its domestic market obligation and price schemes to ensure continued supplies of cooking oil (see p6). Indonesia’s problems are an illustration of the rising food prices and supply deficits being felt by countries around the world – especially in developing nations which have seen their currencies depreciate in recent months.
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These problems call into question biofuels which may still utilise food feedstocks.
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“We’re going to see more pressure on countries to reduce their biodiesel and renewable diesel mandates,” says chief commodities economist at StoneX Financial, Arlan Suderman (see also p10).
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In addition, as the war in Ukraine continues, “there is a growing likelihood that food shortages, particularly of grains and vegetable oils, will become acute, leading more countries to turn to trade restrictions,” the International Food Policy Research Institute (IFPRI) said in an April report. As well as Indonesia, the IFPRI lists some of the countries which have restricted or banned cereal and oilseed exports including: • • • •
Argentina (soyabean oil and meal, through 31 December 2023) Algeria (pasta, wheat derivatives and vegetable oil, through 31 December) Egypt (vegetable oil, corn, wheat, wheat flour and pasta, through 12 June) Russia (sunflowerseed, wheat, rye, barley and corn, through 30 June)
The coming summer looks to be one of rising food prices, with all the economic, political, and social consequences this brings. @oilsandfatsint
Oils & Fats International
2 OFI – JUNE 2022
Comment June 2022.indd 1
Serena Lim serenalim@quartzltd.com www.ofimagazine.com
09/06/2022 08:48:44
