NEW YORK: Due to internal shortages, Indonesia’s decision to ban palm oil exports has driven vegetable oil prices to new highs, further tightening a market already strained by the Ukraine conflict and global warming.

Following Indonesia’s declaration on Wednesday, prices for palm, soybean, European rapeseed, and even its Canadian GMO equivalent, canola oil, have reached historic highs.

“We already had problems with soybeans in South America , with canola in Canada,” said Philippe Chalmin, an economics professor at Paris-Dauphine University in France, noting that both commodities had been adversely impacted by prolonged droughts.

Then followed catastrophe for “sunflowers in Ukraine”  as a result of Russia’s disastrous invasion, he continued.

According to James Fry, head of the LMC consultancy business, palm oil is the most widely used vegetable oil in the world, with Indonesia accounting for 35% of worldwide exports.

Indonesia’s export prohibition is intended to lower costs and prevent shortages in the nation, according to officials.

The move, however, “comes at the worst time,” according to Chalmin.

“The rise in prices dates back to last year already and it is exacerbated by the Ukrainian conflict,” he said.

“the industry believes it’ll last maybe for one month, perhaps two.” said Rich Nelson of agricultural market research and trading firm Allendale.

Meanwhile, prices are soaring in a market that has “already accelerated,” according to him.

Palm fruit, unlike other oilseeds, does not keep once gathered and must be processed right once, according to Fry.

Indonesia’s palm oil storage infrastructure, which previously had significant stocks, is now under much more strain, Fry said.

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