Soybean oil prices have soared to a record high on Indonesia’s decision to effectively ban exports of palm oil. The loss of shipments from Ukraine, the world’s top supplier of sunflower oil, and drought in the world’s top soybean oil exporter Argentina had already sparked a sharp rise in global vegetable oil prices.
The tightening vegetable oil supplies come as easing COVID-19 restrictions have sparked a surge in demand for food and biofuels. While oilseed crushers have announced plans to expand processing capacity, most of the new facilities will not be online for at least a year, industry sources said.
Indonesia, the world’s top producer and exporter of palm oil, blocked exports from April 28 to tackle rising domestic prices. The move looks set to fuel already surging food inflation elsewhere. Food inflation has become a major concern around the globe following Russia’s invasion of Ukraine, a major exporter of wheat, corn, barley, sunflower oil and rapeseed oil.
The United Nations food agency (FAO) reported earlier this month that food prices had jumped nearly 13% in March to a new record high.
Argentina, the world’s top supplier of processed soy ahead of Brazil and the United States, briefly halted new overseas sales of soybean oil and meal in mid-March before hiking the export tax rate in a bid to tamp down domestic food inflation.
The U.S. Agriculture Department (USDA) has predicted that U.S. soy crushers will process a record 60.282 million tonnes of soybeans this year, up 3.5% from a year ago. Palm oil is the world’s most widely used vegetable oil and is used in the manufacture of many products including biscuits, margarine, laundry detergents and chocolate.