Indonesia President Announces End of Palm Oil Export Ban Starting Monday – Reuters

By Bernadette Christina and Fransiska Nangoy

JAKARTA – Indonesia plans to lift its three-week palm oil export ban starting Monday, citing improvements in domestic cooking oil supply. This decision has been welcomed by farmers who have been calling for an end to the restrictions.

The country, which is the world’s largest palm oil exporter, had halted shipments of crude palm oil and certain derivative products on April 28 in an effort to control soaring domestic cooking oil prices. This move caught markets off guard, following a series of prior government interventions.

President Joko Widodo announced that the supply of bulk cooking oil has surpassed current demand, although prices have not yet fallen to the targeted level of 14,000 rupiah per litre. “In several regions, cooking oil prices remain relatively high, but I am optimistic they will become more affordable in the coming weeks,” Jokowi, as he is popularly known, stated in a video message.

Industry representatives had warned of a potential crisis in the palm oil sector if the export ban continued. The government, in its decision, considered the welfare of around 17 million workers involved in the industry. Jokowi emphasized that, while exports will resume, the government will continue to monitor the market closely to ensure that demand is met with reasonable prices.

Following the announcement, palm oil’s benchmark contract in Malaysia dropped 0.98% and was expected to decline further.

Pressure for the lift of the export ban had been building, with members of parliament’s budget committee urging the Finance Minister to reconsider the export restrictions. The ban was implemented at a time when global vegetable oil markets were already facing challenges due to limited sunflower oil supplies resulting from the conflict in Ukraine. Palm oil accounts for a third of the global vegetable oil market, with Indonesia supplying about 60% of that total.

Despite the government’s intentions to ease domestic complaints, there have been significant calls from farmers facing reduced demand for their palm fruits. Demonstrations were held earlier this week in response to the export ban, as the prices of palm fruits fell nationwide.

The palm oil farmer union SPKS expressed hope that the restoration of exports would help normalize plantation activities and improve farmers’ economic conditions.

As of early May, Indonesia’s storage capacity for palm oil was approximately 6 million tonnes, with domestic stocks around 5.8 million tonnes. Large plantation companies have begun extending harvest intervals due to uncertainties in sales, and small farmers have been waiting for days at mills to sell their produce.

Eddy Martono, secretary general of the Indonesia Palm Oil Association, highlighted the difficulties on the ground, noting that storage tanks were nearing capacity. He expressed hope that the resumption of exports would enable palm oil production to resume effectively.