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Fear of shortage of cooking oil in the world

The size of the world’s cooking oil supply is shrinking because of the Russia-Ukraine conflict. Now, this supply is at risk of further scarcity once the ban on the export of palm oil and raw materials related to Indonesian palm oil production takes effect from April 28.

By page Bloomberg, Indonesia currently accounts for more than a third of the world’s vegetable oil exports, with China and India being two of the top customers. Since November 2021, palm oil in Indonesia has become scarce as producers increase exports due to rising prices of this commodity in the world.

Indonesian authorities, now concerned that shortages and rising prices of palm oil could lead to social tension, have stepped in to secure supplies.

Last week, a senior Indonesian trade official was arrested for allegedly granting export licenses to several palm oil companies that failed to meet their obligations to the domestic market. Several executives at three Indonesian palm oil companies were also arrested.

Fear of scarcity of cooking oil in the world - Photo 1.

Cooking oil was distributed to people in the capital Jakarta – Indonesia on March 10 after this item became scarce Photo: REUTERS

Mr. Carlos Mera, an expert at Rabobank (Netherlands), said that Indonesia’s cooking oil supply to the world is “irreplaceable”. Therefore, according to him, the ban announced by Jakarta on April 22 is a blow to the current shortage. In the UK, for example, some supermarkets are limiting the amount of cooking oil customers can buy.

And yet, Mr. Tosin Jack, an analyst at Mintec Company (based in the UK, which provides global price data), said that Indonesia’s latest move will certainly “exacerbate” inflation. food is already at a record high.

The Russia-Ukraine conflict has thrown the sunflower oil trade into turmoil, while also squeezing supplies of other vegetable oils used in food, biofuels and personal care products. .

Unstable weather in many cooking oil producing parts of the world has increased fears of shortages. In South America, drought conditions have reduced the size of soybean harvests. Meanwhile, drought in Canada reduced rapeseed production, making available supplies less available.

Against the backdrop of limited supply and rising prices, developing countries like India are likely to be hit the hardest. These countries have long relied on imported palm oil as a cheaper alternative to soybean, sunflower and canola oils.

The problem is that even palm oil in Asia is up 50% in the last 12 months. Despite record-high prices, demand for vegetable oil remains strong because it plays an important role in the American diet, said John Blaize, a consultant for the US Soybean Export Council. every country.

Also according to Mr. Blaize, Indonesia’s move to limit palm oil exports is a “big deal” but will not last. He noted that the Southeast Asian country in 2021 exported 26.87 million tons of palm oil while the domestic consumption figure was 15.28 million tons.

In the immediate future, follow ReutersIndonesia’s ban could cause global food inflation to rise further. In addition, some analysts are concerned that other countries may take the same step as Indonesia in the event of a protracted Russia-Ukraine conflict, making the situation worse.

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