Indonesia is the world’s biggest producer of palm oil, used as cooking oil, and in products from cosmetics to baked goods to biofuel. Many Indonesians rely on it not just to cook for their families but also for their livelihoods. When the price of vegetable oils began to rise steeply, the Indonesian government scrambled to find effective domestic measures that would protect consumers and banned exports, as for palm oil producers, it is much more lucrative to sell stock abroad instead of domestically.
Whilst the export ban was reversed over a month ago, the impact on commodity prices is still being felt, adding to food insecurity globally.
If you look closely at the infographic, you’ll find even more stories. The last chart is actually the price of palm oil futures and includes prices for the last 5 years. Futures are more driven by supply/demand expectation trends and are usually less volatile compared to spot prices. You may notice that the price of palm oil futures has been rising rapidly over the last 2 years, even before the current disruption associated with the war in Ukraine and food security concerns.
Ultimately, this illustrates that what we are experiencing today is a compound effect of several crises and long-term problems.