Home Business Indonesia to tighten palm oil exports from Jan. 1 to shore up supply ahead of Ramadan

Indonesia to tighten palm oil exports from Jan. 1 to shore up supply ahead of Ramadan

7 min read
Comments Off on Indonesia to tighten palm oil exports from Jan. 1 to shore up supply ahead of Ramadan
0
31


Article content

JAKARTA — Indonesia will tighten export rules for palm oil from Jan. 1 by allowing less shipments overseas for every tonne sold domestically, to ensure sufficient and affordable cooking oil supply at home, officials said on Friday.

Exporters will be allowed to ship six times their domestic sales volume, less than the current ratio of eight times, according to officials and a new regulation reviewed by Reuters.

Article content

“This is a preventive measure against the potential increase in domestic cooking oil prices as demand goes up during the month of Ramadan and Eid al-Fitr, which will fall in March and April 2023,” said Trade Ministry senior official Budi Santoso.

Advertisement 2

Article content

Septian Hario Seto, a senior official at the Coordinating Ministry for Maritime and Investment Affairs said the move is aimed specifically at securing domestic supply for the first quarter of 2023.

The government will continue to evaluate the export ratio periodically, taking into account cooking oil availability and prices, Seto said.

The move caused Malaysian palm oil futures to jump on Friday and hit their highest since Dec. 1 at 4,193 ringgit ($950.79) a tonne.

Indonesia earlier this year battled to keep cooking oil prices from spiraling out of control and introduced export measures on palm oil products with varying degrees of success to try to shore up supply and bring prices down.

A brief ban on exports of the edible oil from Indonesia shook markets and exacerbated existing global supply concerns, but it also led to ballooning domestic inventory.

Advertisement 3

Article content

Indonesia currently imposes a so-called domestic market obligation (DMO) requiring businesses to sell a portion of output locally in return for export permits.

The Indonesian Palm Oil Association (GAPKI) Secretary General Eddy Martono said that concerns were voiced during a meeting with government last week about cooking oil supply, related to the government’s biodiesel program and expectations of lower palm oil output in the first quarter.

Indonesia is planning to increase a mandatory palm oil component in biodiesel to 35% starting Feb. 1.

While businesses will comply with the regulation, Eddy said the new export ratio should be evaluated regularly in the short term to avoid a supply glut.

“If it turns out the forecast is wrong and output did not drop drastically, it must be evaluated, otherwise fresh fruit bunches will pile up again in mills and this will anger farmers,” Eddy said. ($1 = 4.4100 ringgit) (Reporting by Bernadette Christina; Editing by Martin Petty, Kanupriya Kapoor)

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.



Source link

Load More Related Articles
Load More By 
Load More In Business
Comments are closed.

Check Also

Scholz seeks to secure more critical minerals on South America tour

Article content SANTIAGO DE CHILE — German Chancellor Olaf Scholz announced a new, expande…