JAKARTA :Indonesia will further restrict exports of palm oil from Thursday to increase domestic supplies, as authorities ramp up efforts to contain a surge in cooking oil prices, Trade Minister Muhammad Lutfi said.

The world’s biggest producer and exporter of palm oil will require companies to sell 30per cent of their planned exports of crude palm oil and olein at home, up from 20per cent currently, under a scheme known as Domestic Market Obligation (DMO). The new restriction will stay in place for at least six months.

The tightening of restrictions will remove more vegetable oil from a global market already suffering a squeeze in supplies after Russia’s invasion of Ukraine, which is a key global supplier of sunflower oil.

“We increase this DMO to ensure that all parts of the domestic cooking oil industry can function properly,” Lutfi said in a news conference.

“Therefore, we increase it to 30per cent for at least the next six months, after which we can review whether it needs further expansion or adjustment.”

The Southeast Asian country first restricted exports of the vegetable oil in late January after prices of cooking oil rose more than 40per cent at the start of the year amid a surge in global prices.

Although the policy has increased supply at home, consumers have complained that cooking oil is still being sold at prices above the 14,000 rupiah ($0.9739) per litre retail price cap in traditional markets, Indonesia’s Ombudsman said.

Meanwhile at supermarkets, stocks of cooking oils are running out even with most retailers setting a 2-litre quota per buyer. Some stores are even asking buyers to dip their fingers in ink, as is required during elections, to mark that they have used their daily quota.

Lutfi said the new requirement would remain in effect until cooking oil is readily available at local markets and was not offered above a maximum retail price set by the government.

He also said the government will collaborate with the police to monitor implementation of the rules.

Since Indonesia started restricting palm exports in late January, the trade ministry has issued 2.77 million tonnes worth of permits, Lutfi said, with domestic sales estimated at around 573,890 tonnes.

Malaysia’s benchmark palm oil futures gained more than 7per cent after news of Indonesia’s tightening. It was up 1.2per cent in the morning session.

($1 = 14,375 rupiah)

(Editing by Ed Davies, Kanupriya Kapoor and Kim Coghill)