Saturday, 28 January 2023

Cooking oil prices in India may increase on Indonesia's palm oil export ban

Cooking oil prices in India may increase on Indonesia's palm oil export ban

Edible oil prices in India - already high - are likely to increase with Indonesia - the world's biggest palm oil producer - set to ban exports from April 28 in the wake of a local shortage. Indonesia produces over half the world's supply of palm oil - used in everything from processed foods and cosmetics to biofuels - and accounts for over a third of all vegetable oil exports.

Indonesia president Joko Widodo said he wanted to ensure people in his country had food products after global food inflation soared to record highs after Russia invaded Ukraine.

"I will monitor and assess the implementation of this policy, so availability of cooking oil in the domestic market becomes abundant and affordable," he said in a video message.

India and other developing countries, including Pakistan and Bangladesh, will likely be among those most badly hit.

"We are terribly shocked..." Atul Chaturvedi, president of Solvent Extractors' Association of India, told M, "Media were not expecting a ban like this."

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The impact isn't limited to less wealthy nations. Bloomberg said some UK supermarkets were qualifying cooking oil purchases, and a bakers' group in the US, which produces 85 percent of its baked goods, is warning about empty shelves.

Carlos Mera, Rabobank's head for agricultural commodity markets research, said that Indonesia's supply is' impossible to replace.' "It's a big blow. "

Producers in Malaysia - the world's No two palm oil exporter - say they are unlikely to be able to fill in because of a pandemic-induced labor shortage.

News of Indonesia's plans means the world's supply of cooking oil has grown even smaller; trade-in sunflower oil - hugely popular in India - was thrown into chaos after Russia invaded Ukraine and has still not recovered.

Eastern Europe's Black Sea region accounts for over 75 percent of the world's sunflower exports, including India's nearly 100,000 tons per month import that has been halved.

Soybean oil - an alternative to palm - has seen increased interest, with prices in the United States soaring to a record high for a third straight day Friday.

An expected increase in edible oil prices in India comes at the worst possible time for the country, struggling with spiking wholesale inflation, which increased to 14.55 percent in March from 13.11 percent in February.

Last week, government data showed retail inflation had quickened to 6.95 percent in March, compared to 6.07 percent the previous month, driven by a sharp jump in food prices, official data released on Tuesday showed.

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