Indonesia stuns markets as it widens ban to include CPO, refined palm oil

2022.05.02

Indonesia widened the scope of its export ban on raw materials for cooking oil to include crude and refined palm oil, its chief economic minister said on Wednesday, leaving markets in shock over the latest policy reversal.

The announcement flipped the minister's statement a day earlier, in which he had said the export ban would only cover refined, bleached, and deodorized palm olein.

The change was "in line with the president's decision and after taking into account the feedback and views from the people," Airlangga Hartarto said in a short statement.

President Joko Widodo said in a separate statement that people's need for affordable food trumped revenue concerns for now.

"Once domestic needs have been met, of course I will lift the export ban because I know the country needs taxes,...foreign exchange,...a trade balance surplus, but meeting the people's basic needs is a more important priority," he said.

Jokowi, as the president is popularly known, said Indonesia has enough capacity to meet domestic demand and it was "ironic" that the country is facing cooking oil shortages.

Palm oil markets have been jittery ahead of the ban and Indonesia deployed navy ships and personnel in an effort to thwart illegal shipments.

The new rules were due to take effect at midnight local time (1700 GMT), and the navy and other agencies had been instructed to step up patrols of Indonesian waters to ensure compliance, said navy spokesperson Julius Widjojono.

Palm oil futures on the Malaysia exchange surged by 9.8% on Wednesday, as some market participants feared exporters in Indonesia, the world's biggest palm oil producer, could not get their products onboard vessels in time before the ban starts.

US soyoil futures jumped more than 4% to a record high after Indonesia extended ban to include CPO.

Read more here.

Comment

You may also like

2017.01.10
7,441
Introduction Indonesia is now experiencing a bonus demographic population characterized by a growing middle class. This phenomenon has caused increasing demand for beef, where more than 98% of beef cattle production is managed by smallholder farmers. The national policy has been focused on...
2019.07.11
2,280
INTRODUCTION   World palm oil production is dominated by Indonesia and Malaysia, which supply 85-90% of the world's total palm oil production. Indonesia is the largest producer and exporter of palm oil. This industry also contributes the largest foreign exchange to Indonesia, which is...
2021.06.21
569
ABSTRACT Indonesia is the largest palm oil producer globally, producing nearly 50 million metric tons of oil annually. Palm oil has a significant influence on the welfare of Indonesians among local farmers. Although the global controversy over palm oil is increasing, palm oil is the livelihood...