Attack on Ukrainian ports despite talks on exports

OILS & FATS INTERNATIONAL VOL 38 NO 5 JUNE 2022

EDITORIAL:

Editor: Serena Lim serenalim@quartzltd.com +44 (0)1737 855066

Assistant Editor: Gill Langham gilllangham@quartzltd.com +44 (0)1737 855157

SALES:

Sales Manager: Mark Winthrop-Wallace markww@quartzltd.com +44 (0)1737 855114

Sales Consultant: Anita Revis anitarevis@quartzltd.com +44 (0)1737 855068

PRODUCTION: Producti on Editor: Carol Baird carolbaird@quartzltd.com

CORPORATE:

Managing Director: Tony Crinion tonycrinion@quartzltd.com +44 (0)1737 855164

SUBSCRIPTIONS: Jack Homewood subscripti ons@quartzltd.com +44 (0)1737 855028 Subscripti ons, Quartz House, 20 Clarendon Road, Redhill, Surrey RH1 1QX, UK

© 2022, Quartz Business Media ISSN 0267-8853

WWW.OFIMAGAZINE.COM

A member of FOSFA

Oils & Fats Internati onal (USPS No: 020-747) is published eight ti mes/year by Quartz Business Media Ltd and distributed in the USA by DSW, 75 Aberdeen Road, Emigsville PA 17318-0437. Periodicals postage paid at Emigsville, PA. POSTMASTER: Send address changes to Oils & Fats c/o PO Box 437, Emigsville, PA 17318-0437

Published by Quartz Business Media Ltd Quartz House, 20 Clarendon Road, Redhill, Surrey RH1 1QX, UK oilsandfats@quartzltd.com +44 (0)1737 855000

Printed by Pensord Press, Gwent, Wales

Bans shake market

Indonesia’s surprise decision on 28 April to ban exports of crude and refi ned palm oil products shook a global vegetable oil market already struggling with shortages of sunfl ower oil resulti ng from the Russia-Ukraine war.

Palm oil is both the largest volume and most exported vegetable oil in the world (some 77M tonnes and 50M tonnes respecti vely), while Indonesia accounts for the most producti on and exports of this oil (59% and 56% respecti vely).

The temporary export ban was introduced as the country struggled to control soaring cooking oil prices against a backdrop of mounti ng civil unrest.

There have been a raft of changing policies in Indonesia since January – from subsidies on packaged and bulk cooking oil; to domesti c sales obligati ons 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 refi ned, bleached and deodorised (RBD) palm olein to CPO and other refi ned products only one day aft er its initi al announcement.

The ban – put in place unti l the domesti c 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 faciliti es for a crop that needs to be processed immediately aft er harvest.

The domesti c market sti ll remains a priority as the Indonesian government reinstated its domesti c market obligati on and price schemes to ensure conti nued supplies of cooking oil (see p6).

Indonesia’s problems are an illustrati on of the rising food prices and supply defi cits being felt by countries around the world – especially in developing nati ons which have seen their currencies depreciate in recent months.

These problems call into questi on biofuels which may sti ll uti lise food feedstocks.

“We’re going to see more pressure on countries to reduce their biodiesel and renewable diesel mandates,” says chief commoditi es economist at StoneX Financial, Arlan Suderman (see also p10).

In additi on, as the war in Ukraine conti nues, “there is a growing likelihood that food shortages, parti cularly of grains and vegetable oils, will become acute, leading more countries to turn to trade restricti ons,” the Internati onal Food Policy Research Insti tute (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:

• Argenti na (soyabean oil and meal, through 31 December 2023) • Algeria (pasta, wheat derivati ves and vegetable oil, through 31 December) • Egypt (vegetable oil, corn, wheat, wheat fl our and pasta, through 12 June) • Russia (sunfl owerseed, wheat, rye, barley and corn, through 30 June)

The coming summer looks to be one of rising food prices, with all the economic, politi cal, and social consequences this brings.