Palm oil jumped 10% while rival soybean oil hit a fresh record high as traders prepare for the start of Indonesia’s export halt.
Malaysia, the world’s second-biggest producer, is set to see a surge in demand for its products after top grower Indonesia said it will ban exports of RBD palm olein from April 28 to protect domestic supply.
Crude palm oil shipments are however set to continue. The move will remain in place until domestic cooking oil prices ease.
The policy has roiled the global $50 billion palm oil market as Indonesia initially said it would ban all exports of cooking oil before clarifying days later that only certain products will be halted.
However, the government maintains that the temporary ban does not violate the World Trade Organization’s rules.
Palm oil futures for July delivery rose by the 10% trading limit before closing 9.4% higher at 7,001 ringgit ($1,606) a ton, the highest since March 9. Prices are on track for a 23% gain this month. Soybean oil, palm’s closest rival, climbed 2.3% to a fresh record in Chicago as reported by Bloomberg.
Indonesia’s policy could have serious ramifications 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 can ill afford another supply disruption after massive chaos sparked by the war in Ukraine.
