Indonesia excludes palm oil and crude oil from export ban… To avoid the edible oil crisis

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[이데일리 방성훈 기자] While Indonesia announced that it would ban palm oil exports from the 28th, it was reported that the prohibited items were limited to ‘refined, bleached and deodorized (RBD) palm olein’, a raw material for cooking oil.

As exports of other items such as palm oil crude oil and RBD palm oil are expected to continue ‘for now’, the worst global edible oil crisis is likely to be avoided.

(Photo = AFP)

According to Reuters on the 25th (local time), Indonesia’s Ministry of Agriculture and Forestry said in an official letter to 21 local governments that “crude palm oil will be excluded from the planned export ban (from the 28th).” Olein will be included in the ban.”

However, Reuters added that it was unclear whether these items would be affected by the export ban, saying that there was no separate mention regarding RBD palm oil and RBD palm stearin.

According to Bloomberg News, citing a source, Indonesia has decided to ban only the export of RBD palm olein. He added that the remaining items, such as palm oil crude oil and RBD palm oil, will continue to be exported.

RBD palm oil is obtained by refining, bleaching, and deodorizing the palm oil crude oil extracted by pressing the palm fruit. Here, when the fractionation process is performed once more, it is separated into RBD palm stearin, a solid part, and RBD palm olein, a liquid part.

Earlier, Indonesian President Joko Widodo announced on the 22nd that “the export of cooking oil and raw materials for cooking oil will be banned from the 28th until further notice.” This is a measure in response to a sharp rise in domestic cooking oil prices due to a shortage in the domestic market due to the focus on exports.

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However, President Widodo did not disclose details regarding prohibited items or guidelines, and the price of palm oil has soared in international financial markets over the past few days. This is because Indonesia is the world’s largest exporter, accounting for about 60% of the world’s palm oil supply.

In particular, President Widodo’s announcement came amid rising prices of major edible oils such as palm oil, soybean oil, sunflower oil and canola oil by more than 50% over the past six months due to drought, poor crop yield, and war in Ukraine.

At the Kuala Lumpur Exchange in Malaysia the day before, the price of palm oil for July delivery surged 7.0% from the previous trading day at one point during the day, the highest since the 11th of last month. In India, one of the largest importers of palm oil, palm oil prices jumped 5% over the weekend.

However, after the news was released, concerns about the global edible oil crisis have greatly eased, and the price increase has somewhat subsided. On the Kuala Lumpur Exchange on the same day, the price of July palm oil contract closed down 2.1%.

Even so, there are warnings that the vigilance against export bans on other items should not be relaxed. Pelindung Vestari, the CEO of Selangor, Malaysia, pointed out, “As palm oil is a raw material for RBD palm olein, there are still concerns that it will be added to prohibited items.”

Reuters also predicted that as the export ban was implemented to meet demand in the domestic market, if it is not resolved, the number of prohibited items may expand.

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A high-ranking Indonesian government official told Reuters, “We plan to ban the export of RBD palm olein (for now), but if (domestic supply) runs out, additional export bans may be imposed on other items such as palm oil crude oil and RBD palm oil.” said.

On the other hand, as RBD palm olein accounts for 30-40% of Indonesia’s total palm oil exports, it is sufficient to stabilize the domestic market, and there is an optimistic view that the export ban will be lifted soon.

In an investment note on the same day, DBS Bank said, “If domestic demand accounts for a third of production and inventories start to accumulate and prices stabilize, export restrictions are likely to be lifted.” “This measure is highly likely to be temporary.”

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