Jakarta's palm oil export curbs set to hit supplies

Global veg oil supplies already undercut by lower output in S-E Asia, Latin America

SINGAPORE/JAKARTA - A move by top palm oil exporter Indonesia to restrict shipments and boost domestic biodiesel consumption is set to squeeze global vegetable oil supplies already undercut by lower output in South-east Asia and Latin America.

Edible oil buyers, including price-sensitive consumers in South Asia and Africa, will bear the brunt of the supply-side constraints.

They come just as demand is forecast to climb, with China easing Covid-19 controls and India boosting purchases.

Indonesia's export restrictions and higher use of crops for making biofuels are another challenge to food-importing countries hurting from last year's red-hot inflation, which pushed prices of key staples such as wheat, corn and soybeans to all-time or multi-year highs.

"The implementation of (the) B35 mandate in Indonesia in 2023 definitely changes (the) global palm oil SND (supply and demand) situation in 2023," said Mr Oscar Tjakra, a senior analyst at food and agribusiness research at Rabobank.

"I'm now expecting global palm oil SND will be in a slight deficit."