Global oilseed markets remain firm but volatile, with an export ban on Indonesian palm oil the latest sign of growing concern over staple food supplies.
The ban was imposed to control rising prices in the domestic market of the world’s largest palm oil exporter.
Indonesia’s palm exports accounted for about 55% of global exports of the commodity over the past five years, according to AHDB.
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The export ban applies to refined, bleached and deodorized palm olein, but not to the export of crude palm oil. However, these could also be restricted if the domestic situation deteriorates.
Palm oil is a key food ingredient that is also used in biodiesel and animal feed.
market reaction
Global oilseed markets peaked on Friday after the initial announcement before declining slightly, but have since firmed.
May 2022 Paris rapeseed futures were at €1,065/t (£897.58/t) on Wednesday 27 April, up €20.75/t (£17.49/t) on the week.
Farm-gate spot oilseed rape prices rose by more than £30/t to average £877/t in the week to Wednesday 27th April.
Oilseed markets were already bullish, with global supply tight and reduced availability of sunflowers from the Black Sea region.
Speaking on AHDB’s Spring Grain Market Outlook on Tuesday, April 26, lead analyst Anthony Speight said prices have been very active due to events in Ukraine.
“Malaysia has had weather problems that have led to flash floods, as well as labor shortage problems,” Mr Speight said.
“In Indonesia, prices have skyrocketed, leading first to export restrictions and then to progressive levies on exports.”
Palm oil buyers have started looking to alternative global markets, according to United Oilseeds, with Egypt reportedly bidding to buy larger quantities of soybean oil and sunflower oil, and Bangladesh expecting to cut its export tax on vegetable oils from 32% to 10%.
Owen Cligg, trading manager at United Oilseeds, said the whole vegetable oil complex is quite complicated and there has been a shift away from palm oil in the industry due to sustainability concerns.
“As sunflower oil is scarce, rapeseed oil would be the natural substitute, but palm oil could also offer some potential uses,” Mr Cligg said.
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