Cooking oil prices in India may spike on Indonesia's palm oil export ban: Report
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 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 on Russia's invasion of Ukraine.
"I will monitor and evaluate 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 Reuters, "We were not expecting a ban like this."
Indonesia's ban will mean India will lose about four million tons of palm oil every month, the Mint reported.
The impact isn't limited to less wealthy nations. Bloomberg said some UK supermarkets were limiting cooking oil purchases and a bakers' group in the US, which produces 85 per cent of its baked goods, is warning about empty shelves.
Indonesia’s supply is 'impossible to replace', Carlos Mera, Rabobank's head for agricultural commodity markets research, said. "It's definitely a big blow. "
Producers in Malaysia - the world's No 2 palm oil exporter - say they are unlikely to be able to fill in because of a pandemic-induced labour 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's invasion of Ukraine and has still not recovered.
Eastern Europe's Black Sea region accounts for over 75 per cent 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, which is struggling with spiking wholesale inflation, which increased to 14.55 per cent in March from 13.11 per cent in February.
Government data released last week showed retail inflation had quickened to 6.95 per cent in March, compared to 6.07 per cent the previous month, driven by a sharp jump in food prices, official data released on Tuesday showed.
With input from Bloomberg, Reuters