Indonesia Bans Palm Oil Export, Edible Oil Prices Rise!

Consumers in India are already spending more money on packaged food and cooking oil. The prices of edible oil may soar high as Indonesia announces to halt palm oil exports from 28 April 2022. To understand the scenario in detail, go through the following sections.

A Closer Look into the Matter

The Russia-Ukraine war has affected the supplies of sunflower oil in India, putting pressure on daily household budgets. Indonesia, the largest palm oil producer in the world, aims to suspend raw material and cooking oil exports from Thursday. The announcement comes amidst skyrocketing prices and a severe shortage of edible oil in Indonesia.

The cooking oil price averages at around 26,436 rupiahs each litre in this Southeast Asian country, surging over 40% to date. In certain provinces, the prices were almost twice in March 2022.

The world intakes 80 million tonnes of palm oil annually. However, the edible oil consumption is nearly 240 million tonnes every year. The palm oil import in India stands at nearly 0.6 million tonnes, coming from Malaysia and Indonesia. The monthly export is about 1.1 million tonnes.

If the flow of 0.3 million tonnes gets affected, prices will increase further. As such, consumers may have to intake less oil. Further, there isn’t any alternative, as palm oil has been the cheapest in the market.

From November 2021 to March 2022, Indonesia was the leading RBD palm olein supplier, while Malaysia was the leading crude palm oil supplier.

Nation-Wise Palm Oil Import in November-March (in Tonnes)

The table below displays the amount of palm oil that India imported between November 2021 and March 2022 from the different countries.

An Insight into the Stock Market

Frontline stocks such as Godrej Consumer Products, Britannia Industries and Hindustan Unilever dropped between 4% and 6% on the Bombay Stock Exchange. The S&P Bombay Stock Exchange FMCG index slumped 1.7%, against a 1% fall in S&P Bombay Stock Exchange Sensex.

Bottom Line

With Indonesia’s halt on palm oil exports, there may arise another row of price surges in the coming days. Further, this decision will overpower the efforts of the government to encourage edible oil supplies.

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