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Asia Minute: Indonesia’s ban on palm oil exports is linked to Ukrainian invasion

A woman collects palm kernels from the ground at a palm oil plantation in Sumatra, Indonesia
Binsar Bakkara/AP
FILE - A woman collects palm kernels from the ground at a palm oil plantation in Sumatra, Indonesia, Wednesday, Feb. 21, 2018. (AP Photo/Binsar Bakkara)

There’s a new pressure emerging on global prices of food and some household products. This inflation is related to the war in Ukraine. It goes through the Asia-Pacific, and it’s having an impact around the world.

This story starts with one of the most ubiquitous products in the world: palm oil. It pops up in everything from cakes and chocolate to cosmetics and soap.

Indonesia produces more palm oil than any other country in the world, more than half the global crop.

And starting Thursday, the government is slamming the brakes on exports of palm oil, banning them until further notice.

Indonesia Cooking Oil palm oil 042222
Achmad Ibrahim/AP
A vendor shows packs of cooking oil at his stall at a market in Jakarta, Indonesia, Sunday, April 17, 2022. Indonesia will ban exports of cooking oil and its raw materials to reduce domestic shortages and hold down prices, President Joko Widodo announced Friday, April 22, 2022. (AP Photo/Achmad Ibrahim)

Indonesia’s government wants to slow domestic inflation, especially when it comes to the price of cooking oil.

And here’s where Ukraine comes in.

Vegetable oil prices were already heading higher before Russia’s invasion. Droughts in Latin America had hurt crops of soybean oil and droughts in Canada hit canola oil.

Before February, the world’s biggest producer of sunflower oil was Ukraine. Number two was Russia.

All of these can be used as cooking oil. Government reports and trade statistics refer to the category of “edible oils.”

And this is where it comes back to Indonesia and the ban that starts Thursday on the export of palm oil.

While the timeline for the restrictions is uncertain, traders say the export ban will send prices higher for all cooking oils — and likely other products as well.

Bill Dorman has been the news director at Hawaiʻi Public Radio since 2011.
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