Indonesia palm oil export ban fuels global food inflation threat

Indonesia palm oil export ban fuels global food inflation threat

Palm oil prices shot higher and the Indonesian rupiah lost ground on Monday after Jakarta levied a blanket ban on exports of the edible oil in a bid to contain surging food prices as a result of the war in Ukraine.

The move by Indonesia, the world’s biggest exporter of palm oil, is the latest food export ban being implemented by countries around the world suffering from soaring food prices.

“This is yet another reminder of the vulnerability present across agricultural supply chains in an environment of already historically tight inventories, compounded by the indefinite loss of Ukrainian export volumes and historically high production costs,” said Tracey Allen, a JPMorgan analyst in London.

Agricultural commodity prices have jumped after exports from Ukraine, a leading grain and sunflower oil supplier to world markets, stopped due to the war.

Benchmark wheat prices in Chicago have risen 21 per cent while corn has added 15 per cent, leading to higher food import bills for countries reliant on international markets for their grains.

Vegetable oil prices have also shot up, with retailers in many countries starting to ration supplies. The UN Food and Agricultural Organization’s vegetable oil price index has surged 40 per cent this year.

The tight vegetable oil