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

Date: 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.

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