Palm oil rises 10% as market prepares for Indonesia export ban

Palm oil jumped 10%, while rival soybean oil hit a new record high as traders prepared for the start of Indonesia’s export halving.

Malaysia, the world’s second largest producer, is set to see a surge in demand for its products, with top producer Indonesia saying it will ban exports of RBD palm olein from April 28 to protect domestic supplies. Crude palm oil shipments may continue. This move will continue till the domestic cooking oil prices come down.

The policy has rocked the global $50 billion palm oil market as Indonesia initially said it would ban all exports of cooking oil and clarified days later that only certain products would be withheld. The government said the temporary ban does not violate WTO rules.

Palm oil futures for July delivery rose 9.4% from a trading range of 10% before closing at 7,001 ringgit ($1,606) a tonne, the highest level since March 9. Prices are on track for a 23% gain this month. Palm’s nearest competitor, soybean oil, climbed 2.3% to a new record in Chicago.

Paramalingam Supramanyam, director of Selangor-based broker Pelindung Bestari, said, “All attention is on Malaysia for olein demand. There is speculation that China is looking to buy olein as their edible oil stocks at ports are low by the end of April.”

Palm oil is processed and shipped in various forms. Crude palm oil is obtained by crushing the fruits of palm oil. Olin is a high value product that has been processed and is the most widely used cooking oil in the world.

Indonesia’s policy, though less strict than feared, could still have serious implications for the world as it accounts for a third of the global vegetable oil trade. World food prices are already at an all-time high and could lead to another supply disruption after massive chaos from the war in Ukraine.

Traders want clarity on how the ban will affect vessels that have been contracted to Palm Olin but cannot leave Indonesia on time, Paramalingam said, as many are unable to cancel contracts at such short notice. Will be

This policy will start a day before the Eid-ul-Fitr holiday. Indonesian markets will be closed on Friday and throughout the next week, while Malaysia will remain closed from Monday to Wednesday.

Paramalingam said short covering, weak ringgit ahead of the long holiday and a sudden spurt in processed oil demand in May are driving prices up, adding that there is a “widespread belief” that Malaysia’s exports will rise.

This story has been published without modification in text from a wire agency feed. Only the title has been changed.

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