Indonesia should be able to tackle its cooking oil shortage in the next few weeks and lift an export ban on palm oil and its refined products in May, an industry body said on Thursday, a day after a last-minute policy U-turn sparked more alarm for markets. The world’s top palm oil producer expanded an export ban on raw materials for cooking oil to include shipments of crude palm oil and most of its refined products just hours before it took effect at midnight Wednesday, in an attempt to secure domestic supply and bring down soaring prices.
Sahat Sinaga, the senior official at the Indonesian Palm Oil Board, said that decision had shocked the industry, but that he was confident the supply issue could be resolved not long after the Muslim festival of Idul Fitri in early May. He added that a palm oil export target of 34 million tonnes in 2022 would be met. Asked about the timeline suggested by the palm oil board, Trade Ministry senior official Veri Anggrijono said “we are all hoping this can be solved quickly”.
A trade ministry regulation on Wednesday said the export policy would be reviewed monthly, or as often as needed, while Chief Economics Minister Airlangga Hartarto said it could be lifted when bulk cooking oil recedes to 14,000 rupiahs ($0.97) a liter nationwide. Previous measures to tame prices had failed due to distribution problems, not supply shortages at factories, Sinaga said. “It will be a great success. It won’t take long. After Eid, the market will be flooded,” he said.
Markets had shown relief when Indonesia’s chief economic minister said on Tuesday the ban would only cover refined, bleached, and deodorized (RBD) palm olein, but a day later authorities announced other products would be included. That had an immediate impact on global vegetable oil prices, sending palm oil futures in Malaysia up by 9.8 percent. The jitters spilled over into markets on Thursday as the ban took effect.
Trade Minister Muhammad Lutfi said the decision was taken after careful consideration and monitoring the cooking oil supply daily. “I hope we all understand the urgency of this policy,” Lutfi said.
April 29, 2022, The Jakarta Post