According to Indonesia import-export data, the world’s supply of cooking oil, already strained by the Russia-Ukraine conflict, will be further strained by Indonesia’s decision to halt palm oil exports, which will take effect on April 28. Following local scarcity and skyrocketing prices, the country made the decision.
According to our statistics as of September, Indonesia exported $16.7 billion worth of palm oil to the rest of the globe in 2021, with China (13%) and India (12%) being the top purchasers. Here’s a rundown of Indonesia’s palm oil shipments to India and the rest of the globe, as well as how they will affect India.
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Indonesia’s palm oil exports to India and the rest of the world
Every year, India imports over 8 million tonnes of palm oil, accounting for almost 40% of total edible oil consumption. In 2021, Indonesia delivered $16.7 billion in palm oil to the globe, according to our database (till Sep data). Indonesia exports palm oil worth $2 billion to India. The graph below displays the dollar value of Indonesia’s palm oil exports to the rest of the world and India by a quarter last year (till Sep data) and is based on Indonesia export data.
Indonesia palm oil exports to India
Quarter | Value in USD ($) | Year |
Quarter-1 | $624 Million | 2021 |
Quarter-2 | $481 Million | 2021 |
Quarter-3 | $939 Million | 2021 |
Indonesia palm oil exports to the world
Quarter | Value in USD ($) | Year |
Quarter-1 | $5,790 Million | 2021 |
Quarter-2 | $5,573 Million | 2021 |
Quarter-3 | $5,369 Million | 2021 |
Impact on India’s numerous industries
As a result of Indonesia’s prohibition on palm oil exports, prices of edible oil and packaged goods in India are projected to rise due to a lack of supply. Companies that use oil in their goods may see their input costs rise as a result of the supply interruption. This might exacerbate inflation, which is currently at an all-time high of 17 months.
The restriction on palm oil exports in Indonesia will take effect on April 28. The decision was made due to a significant lack of edible oil and increasing costs in the Southeast Asian country.
Food, biofuels, cosmetics, and detergents all use palm oil and its derivatives. These are used to make a variety of everyday items such as chocolates, cookies, noodles, shampoos, margarine, soaps, and other similar items. The following are some of the most important aspects of how Indonesia’s prohibition on palm oil exports would influence India’s diverse sectors.
According to market analysts and Indonesia import-export data, the world cooking oil supply was already in a severe supply shortfall as a result of Russia’s invasion of Ukraine, sending palm and soy oil prices to new highs.
Palm oil and its derivatives are used to make a variety of everyday items such as noodles, cookies, shampoos, and soaps. FMCG firms will be harmed since they utilize palm oil in their products, and an increase in palm oil costs would raise the pricing of these items as well.
Domestic edible oil prices are projected to rise 10-15% in the short term as a result of Indonesia’s prohibition.
The crisis between Russia and Ukraine has already harmed the sunflower supply in India, putting household budgets under strain.
Malaysia, the world’s second-largest producer of palm oil, is also experiencing a production shortfall owing to a pandemic-related labor shortage and is unlikely to be able to fill the void.
According to industry analysts, Indonesia’s decision has an impact not just on palm oil supplies, but also on the availability of vegetable oils globally. In March 2022, retail inflation in India reached a 17-month high of 6.95 percent, owing primarily to higher food prices. Food and other commodity costs have already risen as a result of the country’s high fuel and gasoline prices.
Indonesia’s palm oil exports to the rest of the global markets
According to data from the previous 10 years and Indonesia export data, Indonesia’s palm oil shipments to the rest of the world were at an all-time high in 2017. Indonesia will export palm oil worth US$17,364 million in 2020, and this figure is expected to rise in 2021, as the country delivered palm oil worth US$16,732 million through September.
However, once the export limit was announced, Indonesia’s palm oil exports began to drop in 2022.
Indonesia’s main palm oil export partners’
Move to limit palm oil exports will drive soybean oil futures, an alternative to palm, higher in the United States. Some stores in the United Kingdom restrict cooking oils such as sunflower, olive, and rapeseed.
China and India are the two largest importers of Indonesian palm oil, accounting for more than 25% of total imports in 2021. (till Sep data). Indonesia supplied US$2,243 million worth of palm oil to China and US$2,044 million worth of palm oil to India, according to Indonesian palm oil export data for 2021 (available till September).
Pakistan, the United States, Malaysia, Bangladesh, Spain, Egypt, Myanmar, and Russia were among the other purchasers of Indonesian palm oil. The chart below is based on Indonesia export data and depicts the monetary amount and percentage value of these nations.
Top trading export trading partner countries of Indonesia
Country | Value in USD ($) | Value in % | Year |
United States | $894 Million | 5.3% | Sept-2021 |
Bangladesh | $777 Million | 4.6% | Sept-2021 |
India | $2,044 Million | 12.2% | Sept-2021 |
China | $2,243 Million | 13.4% | Sept-2021 |
Spain | $694 Million | 4.1% | Sept-2021 |
Russia | $468 Million | 2.8% | Sept-2021 |
Egypt | $635 Million | 3.8% | Sept-2021 |
Spain | $694 Million | 4.1% | Sept-2021 |
Myanmar | $517 Million | 3.1% | Sept-2021 |
Pakistan | $1,436 Million | 8.5% | Sept-2021 |
The invasion of Ukraine by Russia has thrown the sunflower oil trade into disarray, putting a strain on already scarce supplies of other vegetable oils used in biofuels, food, and personal care goods.
The global food crisis is now certain to worsen as a result of Indonesia’s decision to restrict palm oil exports. Following the increase in fuel and diesel prices, the cost of purchasing food goods in India would climb much more.
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