Indonesia’s banned the export of palm oil from April 28, resulting in a surge in edible oil prices. Edible oil rose to its highest prices ever — around 45 percent higher than its previous highs recorded in 2008 and then in 2011.
The ban was later scrapped, and Indonesia started waiving export levies.
Palm oil is the most consumed cooking oil in the world, accounting for 40 percent of global consumption, followed by soyabean oil at 32 percent and canola oil at 15 percent. Palm oil accounts for nearly 60 percent of global vegetable oil shipments, and top producer Indonesia accounts for around a third of all vegetable oil exports.
During the three-week export ban, Jakarta’s stocks ballooned to 6.69 million tonnes by end-June from around 4 million tonnes at the end-2021, back to 4.5 to 5 million tonnes by end-September. The government increased shipments to help bring down the stocks.
The government was aiming to bring down local edible oil prices but, in the process, caused world prices to surge, hitting a record 7,268 Malaysian ringgit ($1,598) per tonne.
Producers in Malaysia, the second-largest palm oil producer, along with rival oils like soy oil and sun oil, rushed in to grab Indonesia’s market share. Malaysia has also displaced Indonesia so far in the 2021/22 marketing year to end-October as the top palm oil supplier to India, according to SEA data.
Indonesian producers are now taking back business from their Malaysian neighbours with aggressive discounting. Indonesian Trade Minister Zulkifli Hasan also urged India to buy more palm oil from his country when he visited India last month, Reuters reported quoting a senior industry official who attended the minister’s meeting with Indian buyers.
Here’s how the drop affects Indian FMCG companies
