Palm oil price hits 7-week high on concerns over Indonesia’s export ban

JAKARTA: Malaysian palm oil futures jumped to a seven-week high on Wednesday, propped by concerns that exporters from Indonesia would not get their products out soon enough as the export ban is set to take effect at midnight.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange gained 601 ringgit, or 9.39%, to 7,001 ringgit ($1,606.47) a tonne, when the market closed.

Indonesia will ban exports of refined, bleached and deodorized palm olein from midnight on April 28 until prices of bulk cooking oil drop to 14,000 rupiah per litre, a senior minister said on Tuesday, while a document showed it was prepared to widen the ban if there are shortages.

“Market observers feel that Indonesian exporters may not load the already contracted volume of RBD Palm olein before the export ban from April 28. The ban was enforced in a very short notice and they could not arrange the logistics,” said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.

If the RBD palm olein cargoes cannot sail from Indonesia, the demand will transfer to other origins mainly Malaysia, Bagani said.

Dalian’s most-active soyoil contract gained 3.18%, while its palm oil contract jumped 4.65%. Soyoil prices on the Chicago Board of Trade rose 3.88%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.