Palm Oil Prices Set To Rise By 15% As Indonesia Bans Export

Edible oil prices, which have been under pressure for the past two months due to the ongoing Russia-Ukraine war (as both nations are the largest producers of sunflower oil), are expected to rise steeply after Indonesia, which is the largest producer of palm oil, has announced a ban on its export from April 28.

The development is likely to raise domestic prices of edible oil by around 15 per cent, which may further put pressure on household budgets, that are already squeezed due to high sunflower oil prices. 

On April 22, Indonesian president Joko Widodo had announced the suspension of all cooking oil and raw material exports from April 28 until further orders. The South-east Asian nation's decision has come in the wake of a severe shortage and spiralling prices of edible oil there.

The retail price of cooking oil in Indonesia averages at 26,436 rupiahs ($1.84) per litre, up more than 40 per cent so far this year. In some provinces, prices have nearly doubled in the past month alone, reports said.

Palm oil is by far the most produced, consumed and traded edible oil in the world and accounts for roughly 40 per cent of the supply of the top four most popular edible oils -  palm oil, soybean oil, rapeseed oil (canola) and sunflower seed oil.

Around 77 million tonnes of palm oil are expected to be produced this year, according to the US Department of Agriculture (USDA). Indonesia is the top producer, exporter and consumer of palm oil, accounting for around 60 per cent of total supply. Malaysia is the second largest supplier with about 25 per cent of global supply share, Reuters said.

India is the top palm oil importer, while China, Pakistan, Bangladesh, Egypt and Kenya are other major buyers. India imports around 0.6 million tonnes of palm oil, 50 per cent of which comes from Indonesia and the remaining from Malaysia.