Palm oil export ban pushes up oilseeds markets

Global oilseeds markets remain firm but volatile, with a ban on Indonesian palm oil exports the latest sign of rising concern over the supply of staple foods.

The ban has been imposed to help control rising prices in the domestic market of the world’s largest exporter of palm oil.

Indonesia’s palm exports accounted for about 55% of global exports of the commodity during the past five years, according to the AHDB.

The export ban covers refined, bleached and deoderised palm olein, but not exports of crude palm oil. However, these could also be restricted if the domestic situation worsens.

Palm oil is an important food ingredient, also used in biodiesel and animal feed.

Global oilseeds markets peaked on Friday following the initial announcement, before dipping slightly, but have since begun to firm again.

May 2022 Paris rapeseed futures stood at €1,065/t (£897.58/t) on Wednesday 27 April, up €20.75/t (£17.49/t) on the week.

Ex-farm spot oilseed rape prices jumped by more than £30/t in the week to Wednesday 27 April, averaging £877/t.

Oilseeds markets were already bullish, with tight global supply and reduced availability of sunflowers from the Black Sea region.

At the AHDB’s spring grain market outlook on Tuesday 26 April, senior analyst Anthony Speight said prices had been very active because of events in Ukraine.

“In Malaysia, there has been weather issues that has brought about flash flooding, as well as problems with a shortage of labour,” said Mr Speight.

“In Indonesia, prices have been skyrocketing, which initially led to export restrictions and then to a progressive levy tax on exports.”

Palm oil buyers have begun to look at alternative global markets, according to United Oilseeds, with Egypt said to be tendering to purchase increased volumes of soy oil and sunflower oil, and Bangladesh expected to cut its export tax for vegetable oils from 32% to 10%.

Owen Cligg, trading manager at United Oilseeds, said the whole vegetable oil complex was quite complicated, and there had been a move away from palm oil among industry due to sustainability concerns.

“With sunflower oil in short supply, rapeseed oil would be the natural replacement, but palm oil may also hold some potential uses,” said Mr Cligg.

Tags: exports, domestic market, Indonesia, prices, oilseeds, palm oil, ban, markets