The price of edible oils such as soybean oil, sunflower oil and rapeseed oil are set to rise after Indonesia announced a surprise palm oil export ban, experts have warned.

The main edible oils are already in short supply due to adverse weather conditions and Russia’s invasion of Ukraine. Indonesia’s decision to suspend exports will put additional pressure on cost-conscious consumers in Asia and Africa, hit by rising fuel and food prices.

“Indonesia’s decision not only affects the availability of palm oil, but also vegetable oils around the world,” James Fry, chairman of commodities consultancy LMC International, told Reuters.

Palm oil – used in everything from cakes and frying fats to cosmetics and cleaning products – accounts for almost 60% of global vegetable oil shipments, and Indonesia, the top producer, accounts for around a third of all vegetable oil exports. He announced the export ban on April 22, until further notice, in a bid to tackle rising domestic prices.

“This is happening while the export tonnages of all the other major oils are under pressure: soybean oil due to droughts in South America; rapeseed oil due to the disastrous canola crops in Canada; and sunflower oil because of Russia’s war on Ukraine,” Fry said.

Rasheed Jan Mohd, Chairman of the Pakistan Edible Oil Refiners Association (PEORA), said, “No one can compensate for the loss of Indonesian palm oil. Every country will suffer.

Vegetable oil prices have already risen more than 50% in the past six months, with factors ranging from labor shortages in Malaysia to droughts in Argentina and Canada – the biggest exporters of soybean oil. and canola oil respectively – cut supplies.

Buyers had hoped a bumper harvest of sunflowers from Ukraine, the top exporter, would ease tensions, but supplies from kyiv have come to a halt following the Russian invasion.

This had prompted importers to bet on palm oil to fill the supply gap until Indonesia’s shock ban dealt a “double whammy” to buyers, said Atul Chaturvedi, chairman from the trade body Solvent Extractors Association of India (SEA).

Importers such as India, Bangladesh and Pakistan will try to increase their purchases of palm oil from Malaysia, but the world’s second largest palm oil producer cannot fill the vacuum created by Indonesia, Chaturvedi said. Malaysia accounts for 31% of the world’s palm oil supply, second only to Indonesia’s 56%.

Indonesia typically supplies nearly half of India’s total palm oil imports, while Pakistan and Bangladesh import nearly 80% of their palm oil from Indonesia.

In February, vegetable oil prices hit a record high as supplies of sunflower oil were disrupted from the Black Sea region.

A Malaysian state-backed palm oil group says countries should suspend or slow down the use of edible oil as biofuel to ensure adequate supplies for use in food, warning of a crisis of supply following Indonesia’s ban on palm oil exports.

Palm oil is also used as a feedstock for biodiesel. Indonesia and Malaysia mandate the blending of biodiesel with a certain amount of palm oil – 30% and 20% respectively – and last month said they remained committed to those mandates, despite rising oil prices. the Palm.

With Reuters