Edible oils have already been under intense price pressure following Russia’s invasion of Ukraine which has impacted key exports such as sunflower and rapeseed oil. Palm oil is widely used in a range of food products as well as cosmetics and cleaning product with Indonesia ranking as the world’s top producer. Analysts at Saxo Bank warned: “Indonesia exports almost half of the global palm oil supply, suggesting further risks to Asia and global inflation outlook.” Despite its high production, rising global prices have put pressure on consumers in Indonesia with the government now looking to try to maintain affordability.
In a statement President Joko Widodo said: “I will monitor and evaluate the implementation of this policy so availability of cooking oil in the domestic market becomes abundant with affordable prices.”
The export ban will come into effect on on 28 April though prices have already jumped as much as seven percent since the ban was announced.
Importers will likely now look to the world’s second largest exporter Malaysia for supplies however it is predicted to struggle to make up the shortfall.
Rasheed JanMoh, chairman of Pakistan Edible Oil Refiners Association, told Reuters: “Nobody can compensate for the loss of Indonesian palm oil.
“Every country is going to suffer.”
The ban comes as global pressures on cooking oils is already becoming noticed by shoppers in the UK.
A number of major British supermarkets have begun rationing oils with Tesco limiting purchases to three bottles per customer.
Morrisons and Waitrose meanwhile have limited shoppers to two bottles.
Shortages of cooking oils began late last year with labour shortages in Malaysia and a drought in Canada reducing global exports.
Hopes of demand being met from sunflower oil were then further dashed by Russia’s invasion of Ukraine.
Both countries are major producers of sunflower oil and account for 76 percent of world exports with the conflict seeing shipments from the region tumble.
The conflict is also expected to disrupt planting and growing this year meaning further shortages will likely continue for a while after any resolution.
Indonesia has not given any indication of how long the ban may last, however it has notably been brought in ahead of Indonesia’s Lebaran holiday in early May leading analysts to predict the suspension could be lifted when local demand returns to normal afterwards.
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Palm oil remains one of the most widely used edible oils in the world, accounting for 40 percent of the top four most popular, alongside soybean, rapeseed and sunflower oil.
However it has also proved controversial due to its links to deforestation and habitat loss of endangered species such as the orangutan.
Supermarket Iceland previously stopped the use of palm oil in its products however it was forced to temporarily overturn the ban this year due to the shortage of sunflower oil following the Ukraine crisis.