Indonesia halts palm oil exports, complicating supply chains and lifting food prices
Apr. 22, 2022 1:32 PM ETTTE, E, PG, CL, GIS, KHC, DAR, NTOIF, REGIBy: Nathan Allen, SA News Editor34 Comments
Oil Palm Plantations
Vaara/E+ via Getty Images
Indonesia's President Joko Widodo announced a palm oil export embargo Friday; the ban is set to begin April 28th.
Edible oils have rallied ~40% year to date, with the UN edible oils index hitting all-time highs in March; soybean oil in Chicago bounced ~3% on the back of Friday's announcement.
Indonesia accounts for over half of global palm oil production, though palm oil is widely used in food processing and cooking, it's also a major ingredient in personal care products, including everything from soap and shampoo, to lotion and makeup.
For energy investors, it's noteworthy that palm oil has long been a feedstock in the production of bio-diesel; in Europe, palm oil feedstocks accounted for ~18% of bio-diesel production in 2020
A palm-oil embargo could complicate sourcing for consumer goods producers like Procter (PG) and Colgate (CL),
while also posing challenges for processed food producers like General Mills (GIS) and Kraft (KHC).