Indonesia stuns markets as it widens ban to include CPO, refined palm oil

• Indonesia widened the scope of its export ban on raw materials for cooking oil to include crude and refined palm oil, its chief economic minister said, leaving markets in shock over the latest policy reversal.
• The announcement flipped the minister’s statement a day earlier, in which he had said the export ban would only cover refined, bleached, and deodorized palm olein.
• The change was “in line with the president’s decision and after taking into account the feedback and views from the people,” Airlangga Hartarto said in a short statement.
• President Joko Widodo said in a separate statement that people’s need for affordable food trumped revenue concerns for now.
• “Once domestic needs have been met, of course I will lift the export ban because I know the country needs taxes, foreign exchange, a trade balance surplus, but meeting the people’s basic needs is a more important priority,” he said.
• Palm oil markets have been jittery ahead of the ban and Indonesia deployed navy ships and personnel in an effort to thwart illegal shipments.
• The new rules were due to take effect at midnight local time (1700 GMT), and the navy and other agencies had been instructed to step up patrols of Indonesian waters to ensure compliance, said navy spokesperson Julius Widjojono.
• Palm oil futures on the Malaysia exchange surged by 9.8% on 27 Apr 22, as some market participants feared exporters in Indonesia, the world’s biggest palm oil producer, could not get their products onboard vessels in time before the ban starts.
• US soyoil futures jumped more than 4% to a record high after Indonesia extended ban to include CPO.
• It was unclear if palm oil companies had been informed of the latest policy change. Industry sources and traders, who requested anonymity because of the sensitivity of the issue, said they were shocked by the latest development.
• “It’s a drastic measure to rein in the prices and we hope it has the intended effect within a short period, and avoid hurting the industry,” a palm industry source said.
• “This is crazy. We are paying a price for Indonesia policy flip-flops. Every vegetable oil is going through the roof. Securing supplies of any vegetable oil for May 22 shipments is a challenge,” said a New-Delhi based dealer with a global trading firm.
• A trade ministry regulation issued on 27 Apr 22 said exporters who have secured customs declaration by 27 Apr 22 at the latest can still ship their products. The export ban will be reviewed monthly or as often as needed, the regulation added.
• Eddy Martono, secretary general of the Indonesia Palm Oil Association (GAPKI), earlier said the industry was trying to “operate as usual while continuing to monitor market movements”.
• Eddy said that with such short notice on the ban, first announced by President Joko Widodo on 22 Apr 22, there was no way exporters could rush their products out.

External Link : https://www.channelnewsasia.com/business/indonesia-stuns-markets-it-widens-ban-include-cpo-refined-palm-oil-2650211