India Ratings and Research (Ind-Ra) on Friday said Indonesia’s recent decision to include crude palm oil (CPO) under its export ban with effect from April 28 will impact both supply and prices of edible oils globally. likely to fall.
The move could remove about 2 million tonnes (mnt) of palm oil supply from the global market each month, which accounts for about 50% of global monthly trade volume, leading to increased replacement demand for other oils and thus wider growth. happened. Edible oil prices.
The ban puts half of India’s palm oil supply at risk, while consumer inflation is also rising. Higher imports at continued depreciation would affect the landed prices of other edible oils.
However, Ind-Ra believes the ban is unlikely to last long, given that Indonesia consumes less than 40% of its total palm oil production, with the resulting effect being transient.
Indonesia announced a ban on palm oil exports on April 22 to increase domestic availability and control rising domestic prices.
Clear reports on 25 April 2022 indicated that the ban was not applicable to CPOs, but to refined bleached deodorized palmolein, but the government expanded its scope to include CPOs a few days later.
Further, it was noted that the prices of all edible oils have seen a significant increase since the outbreak of COVID, which has caused supply chain disruptions globally.
CPO prices hit a decade high of more than $1,200 in 2021 as production continued to increase consumption for three consecutive years (2018-19 to 2020-21), leading to a reduction in inventory.
The price rose to $1,900 a tonne in March 2022 as the Russia-Ukraine conflict severely affected the availability of crude sunflower oil, as Ukraine and Russia account for more than two-thirds of global sunflower oil. In addition, the drought in South America has had an impact on soybean production, leading to a huge demand for replacements, the report said.
Soybean oil and sunflower oil prices increased by 30-50 percent from January 2022 to April 2022.
According to the report, CPO prices have seen a lot of volatility in the past one week due to confusion over the products under the ban.
The export ban is the latest in a series of measures taken by the Indonesian government to control rising palm oil prices in the country, which increased significantly over the past year due to supply constraints due to adverse weather conditions and labor availability issues. Is. Report added.