Indonesia to ban exports of palm oil amid domestic unrest

Indonesia will ban all exports of cooking oil and their raw materials - with palm oil a major component - from April 28, until a later, yet-to-be-decided date, a statement from the country's president has said Friday.

The policy was expected to remain in place until the local supply shortage situation is resolved according to the statement from President Joko Widodo released in a media briefing Friday.

"With Indonesia the world’s biggest exporter of palm oil, this will make [price] sentiment more firm than ever," a regional shipbroker said.

"However, this is likely to dampen freight rates with this trade flow being disrupted," added the ship broker.

"Prices will be bullish with export availability of palm oil limited and other suppliers like Malaysia, Thailand, Papúa New Guinea and Colombia would benefit from this," said a regional palm oil broker.

However, other trade sources raised doubts over whether the decision would curtail all exports.

"Indonesian decision are never stable. Material will flow out through other ASEAN countries," one India-based trade source said.

The measure has been implemented against a backdrop of mounting civil unrest as the cost of living surges domestically, and amid reports that Widodo is considering extending his term as the country's president. 

In response to the surge in domestic prices, the government has placed new responsibilities on exporters to guarantee domestic supply when exporting and introducing new reference prices. 

However, the measures have produced mixed results, with signs of mounting frustration on the part of the authorities and accusations of corruption.