Amid an ongoing global food price crisis, vegetable oils are registering record-breaking highs. According to data compiled by the Food and Agriculture Organization of the United Nations, the price for edible oils rose to almost 250 per cent of standard price levels.

Over the past two years, labour restrictions, climate change and violent conflict have contributed to this latest oil crisis. As the COVID-19 pandemic spread rapidly across six continents, lockdowns resulted in work restrictions, affecting production sites and processing facilities in strategic locations such as Indonesia and Malaysia. These two countries are the top producers of palm oil, accounting for approximately 40 per cent of the vegetable oil market.

The other major commodities in this sector — soybean oil, canola oil and sunflower oil — fared even worse. A combination of heatwaves and droughts wiped out millions of tonnes in South America’s soybean harvest and decimated the canola harvest in Canada, which fell to a nine-year low.

In a catastrophic turn of events in Europe, the Russian invasion of Ukraine caused the price of sunflower oil to soar. When shipments of the important export crop came to a halt due to conflict-induced logistical bottlenecks in the supply chain, the market reacted instantly: futures contracts for sunflower oil suddenly swelled to US$2,361 from the previous year’s US$1,404 per tonne.

Given the market disruptions, commodity traders turned their attention back to palm oil, the cheapest and most abundant vegetable oil. Oil palm plantations yield an average of approximately three tonnes of oil per hectare each year, while other oil-producing crops generate less than one tonne of crude oil per hectare.

As the leading producer, Indonesia accounts for almost two-thirds of global palm oil exports. So, when Indonesian President Joko Widodo announced an unprecedented ban on palm oil exports in late April, he sent a shock wave across agri-food markets. What moved him to take such a radical step?

Read more- https://theconversation.com/the-impact-of-indonesias-ban-on-palm-oil-exports-reverberated-across-the-globe-182501