Indonesia’s decision to completely suspend palm oil exports has led to a new rise in vegetable oil prices, which had already reached record levels due to the war in Ukraine and reduced yields due to climate change.
Palm oil, soybeans, oilseed rape: prices of all vegetable oils have reached historic highs following the announcement Wednesday of Indonesia’s export embargo.
“We already had problems with soybeans in Latin America, with oilseed rape in Canada,” as the crops were limited due to bad weather, “then with sunflower oil in Ukraine,” said Philip Salmen, a professor of economics at the University of Paris-Dauphine. .
“Rising prices started last year and worsened with the Ukrainian war, but I do not understand the logic of this embargo, which came at the worst possible time,” he added.
Palm oil is the most widely consumed vegetable oil in the world, ahead of soybean oil, and exports from Indonesia cover 35% of world needs, according to James Frey, president of the LMC, making the country the largest exporter. worldwide.
Officially, the decision to suspend exports from Indonesia is aimed at reducing the price of palm oil in the internal market and reducing shortages, according to the authorities.
“The industry estimates it will take a month, maybe two,” said Rich Melson of Allendale. “But in the meantime he breaks one record after another.”
“Vicious circle”
Palm oil is used in many foods, such as instant noodles and packaged sweets and cookies, but also in cosmetics and hygiene products.
In the short term the only vegetable oil that can replace palm oil is soy.
The United States and Brazil, the world’s two largest soybean exporters, still have stocks, though they are not expected to help cut prices.
The next crops remain. The US Department of Agriculture announced in March that it expects to increase soybean arable land by more than 4% this year, with a corresponding reduction in corn areas.
By contrast, Canada, by far the largest exporter in the world, said on Tuesday that it expects rapeseed arable land to fall by 7%.
For many experts, public policy plays an important role in this crisis.
“It brings the nutrition and energy debate back to the forefront,” Arlan Sanderman explained, adding that “countries will come under pressure to reduce their use of biofuels,” many of which use vegetable oils.
Europe has already adopted a directive to eliminate palm oil by 2030 as part of its renewable energy targets, and some countries, such as France, have already done so.
But despite market turmoil, Indonesia and Malaysia, the second-largest exporter of palm oil, continue to use it in biofuels.
Michael Zuzolo, president of Global Commodity and Analytics Consulting, said many countries importing large quantities of palm oil, such as Egypt, Bangladesh and Pakistan, had seen their currencies lose value in recent months. At the same time the trend was opposite in some exporting countries, such as Brazil and the USA.
“The worst-case scenario (…) is a vicious circle,” he warned, with many developing countries “finding it increasingly difficult to get adequate supplies.”
SOURCE: ΑΠΕ-ΜΠΕ
Source: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
