As of: 04/29/2022 5:21 p.m
Chaos on the vegetable oil market: The export ban on Indonesian palm oil has pushed prices up further. Many German groceries and even cosmetic products could become even more expensive.
Manufacturers of confectionery, finished products and cosmetics are alarmed: Indonesia has stopped exports of palm oil since Thursday. The island state is by far the world’s largest producer of the oil, which is ecologically controversial but increasingly used in industry. Palm oil can be used in a variety of ways like hardly any other vegetable raw material – whether in chocolate, biscuits, margarine, instant soup, ice cream, pizza, shaving foam or shampoo. Almost every second product on the supermarket shelf contains palm oil.
Two thirds of all world exports
Of the around 77 million tons of palm oil produced worldwide last year, 45.5 million come from Indonesia. The country “accounts for around two-thirds of all global exports,” says agricultural economist Matin Qaim from the University of Bonn. Therefore, the total amount cannot simply be imported from elsewhere. Other countries like Malaysia cannot possibly compensate for these lost export volumes. Malaysia produces 19 tons of the reddish-brown vegetable fat and accounts for a third of global palm oil exports.
Although Indonesia’s export ban only applies to bleached and refined palm oil products, these still account for almost half of all Indonesian palm oil exports. Crude palm oil, which can still be exported, accounts for only eight percent of exports.
Palm oil prices are rising
The news made for a turbulent week in Asian commodity markets. Due to the feared shortage, palm oil prices on the futures market in Kuala Lumpur in Malaysia rose sharply – by a good seven percent. Commodity analysts in Singapore and Jakarta spoke of a “shock” for the markets. The price rally for other vegetable oils also picked up speed again. Sunflower oil, which has become scarce because of the Ukraine war, has become more expensive, as has rapeseed oil.
In some cases, palm oil can be replaced by other vegetable oils such as soybean, rapeseed and sunflower oil, but these are also extremely scarce on the world market at the moment. “Indonesia’s decision has implications not only for the availability of palm oil, but also for vegetable oils worldwide,” said James Fry, chairman of commodity frying company LMC.
Asian countries hit hard
The main victims of the Indonesian export ban are Asian countries, which import a lot of palm oil. Pakistan and Bangladesh get almost 80 percent of their palm oil from Indonesia. And half of India’s huge demand for palm oil is covered by Indonesian exports. That’s why the current export ban is also increasing concerns about impending hunger crises, says agricultural economist Qaim.
Several German sectors of the economy are also likely to feel the effects of the Indonesian export ban. The domestic confectionery industry, for example, is very dependent on the vegetable raw material. The oil palm is an irreplaceable source of oil, says a spokeswoman for the industry association. The increased raw material prices could lead to cost increases.
dr Oetker & Co. expect higher food prices
According to Paul Mohr, manager of the raw material consulting company Inverto, consumers have to adjust to rising food prices due to the palm oil shortage. This is confirmed by the food company Dr Oetker. He also expects higher prices. Other companies such as Nestlé are still monitoring the situation and do not want to comment.
Around 1.8 million tons of palm oil are consumed in Germany every year. In recent years, the share of palm oil in the production of vegetable oils has risen massively – from twelve percent 40 years ago to 37 percent now. The red-brownish vegetable fat is frowned upon by environmental and animal rights activists. Whole forests are cleared for the huge palm oil plantations. The orangutans in Borneo, who are losing their habitat, are suffering from this. Doctors also criticize the high proportion of trans fatty acids in palm oil. The high levels of cholesterol and fat contained therein are harmful to health.