Indonesia to suspend some palm oil export permits, say officials

CNA – Indonesia will suspend some palm oil export permits to secure domestic supply amid rising cooking oil prices ahead of upcoming Islamic festivals, senior Cabinet Minister Luhut Pandjaitan said on his official Instagram account.

Palm oil exporters had accumulated large shipment quotas from last year and they now had little incentives to supply the domestic market, he said.

Indonesia, the world’s top palm oil exporter, issues export quotas for palm oil companies which have sold a proportion of their products to the domestic market, under a policy known as “Domestic Market Obligation” (DMO).

The DMO currently allows export volumes of six-times what the companies have sold at home.

Luhut said “exporters can use those export rights after the situation has calmed”.

Coordinating Ministry of Maritime and Investment official Firman Hidayat said around a third of the existing exports quota could be used now, while the rest could be used after May 1. Firman said exporters were holding around 5.9 million tonnes of export permits by end of January.

Exporters could increase their quota when they raised supplies to the domestic market, he said.

Retailers have complained that cooking oil packages at lower prices have been hard to procure and they were forced to sell them above the regulated price of IDR14,000 per litre.

The Trade Ministry last month said palm oil companies had been ordered to increase domestic supply to 450,000 tonnes per month until April, up from roughly 300,000 tonnes previously.

Food prices typically rise ahead of Ramadhan and Aidilfitri celebration which fall in April this year.

Rattling global edible oil markets, Indonesia last year banned exports of palm oil used in everything from margarine to cosmetics and fuel for three weeks due to soaring cooking oil prices.

But palm oil prices have since fallen back sharply to stabilise at lower levels and the outlook is less certain with energy prices off their highs and fears over a global recession.