As the world's largest producer and exporter of palm oil, Indonesia recently announced that it will suspend the export of palm oil and related raw materials from April 28, which has triggered large fluctuations in the price of international oil and fat varieties.
Due to the current high dependence of China's palm oil on foreign countries, Indonesia's move to suspend palm oil exports may make major palm oil importers, including India and China, make further responses.
There are also voices in the industry that Indonesia will not really stop palm oil exports. Brick agricultural big data oil industry researcher Wang Chen told the first financial reporter that Indonesia's palm oil production has continued to increase since 2000, domestic production is far greater than demand, objectively there is export demand. Considering that Indonesia has taken similar measures in the early stages, but the precedent of being cancelled immediately after the phased increase in international palm oil and soybean oil prices, the market should not be overly pessimistic.
Indonesia is behind a ban on the export of palm oil
Internationally, palm oil, soybean oil, rapeseed oil and called "the world's three major vegetable oils". From the perspective of production areas, Indonesia is the world's largest palm oil producer, accounting for about 60% of global palm oil production. In terms of export volume, Indonesia and Malaysia are the two largest palm oil exporters in the world, accounting for nearly 90% of global palm oil exports.
Affected by the political turmoil in the Black Sea region that triggered soaring international edible oil prices, the average retail price of edible oil in Indonesia has risen by more than 40% this year, and Indonesian officials believe that the new palm oil export ban aims to "ensure that the domestic edible oil supply is sufficient and the price is reasonable."
At present, the international situation is turbulent, the uncertainty of grain trade is increasing, and the global oilseed export area is relatively concentrated, which can easily trigger a sharp rise in prices.
Wang Chen said that due to the impact of the international turmoil in the Black Sea region, the export of oilseeds and oils has been blocked. At the same time, South America is affected by La Niña, the climate drought has triggered a reduction in soybean production this year, and the international market is more dependent on palm oil and US soybeans in Southeast Asia.
Despite Indonesia's current ban on palm oil exports, Wang Chen believes there is still room for turning. Because since 2000, Indonesian palm oil production has continued to increase, but Indonesia's domestic demand is 16 million -18 million tons, even in recent years Indonesia vigorously develop biodiesel, the demand for palm oil has grown rapidly, but domestic production is still significantly higher than demand. According to the USDA's latest monthly supply and demand report, Indonesia produces 44.5 million tons of palm oil and exports 28 million tons.
In addition, palm trees produce palm fruits throughout the year, which are extracted from palm fruit presses to produce palm oil, and there will be a seasonal increase in palm oil production in Southeast Asia in May. The industry believes that in the context of international agricultural trade tensions, Indonesia has the consideration of using the dominant position of its own palm oil production and export to push up global edible oil prices and thus export profits.
It is worth noting that at the end of January this year, Indonesia also introduced measures to restrict palm oil exports, and cancelled this measure after the international palm oil and soybean oil prices rose sharply in stages.
The sharp rise in palm oil prices is related to the international situation
In China, vegetable oils and fats are the most important edible oils and fats. Among these vegetable oils and fats, soybean oil, palm oil, rapeseed oil and peanut oil are the mainstays, accounting for nearly 90%.
However, China's dependence on vegetable oil imports has always been high. Taking 2021 as an example, soybean oil is 85.5%, palm oil is 100%, palm oil, rapeseed oil are all around 50%. Specific to palm oil, data from the General Administration of Customs shows that the main importers of palm oil on the mainland in the first quarter of this year were Indonesia and Malaysia. Among them, 258,300 tons of palm oil were imported from Indonesia, accounting for 52%, and 242,800 tons of palm oil were imported from Malaysia, accounting for 48%.
This time Indonesia's restrictions on palm oil exports are bound to bring about tight global palm oil supply and rising prices, so the international community will turn its attention to Malaysia, but the situation is not optimistic.
Wang Chen said that on the one hand, the Malaysian Palm Oil Association (MPOB) data in April showed that the country's inventory has been in a downward state for five consecutive months; on the other hand, although the country's palm oil production has shown a seasonal recovery trend since entering April, but due to labor shortage factors and domestic demand, the increase in exports is not large. Therefore, for Malaysia or other palm oil exporters, there may not necessarily be a significant benefit from this.
Although less replaceable in terms of import source countries, soybean oil is the closest food and fuel alternative to palm oil and will play a role in substitution.
Palm oil is mainly used for food frying, puff pastry and food serving oils, or as a low-cost oil added to small and medium-sized packages of blended oils. The price of palm oil has always been lower than that of soybean oil, but the current price of palm oil has been significantly higher than that of soybean oil, and it is no longer a low-priced oil.
Zhao Wanping, vice president of the Anhui Academy of Agricultural Sciences, told the first financial reporter that this will trigger a large replacement of palm oil in cooking oil. As for puff pastry processing and frying, due to the unique characteristics of palm oil, it is difficult to replace it with soybean oil. It is particularly important that China's soybean oil mainly relies on overseas imports of soybean crushing, and the consumption is much higher than palm oil, taking 2021 as an example, soybean oil is 17.5 million tons and palm oil is 6.7 million tons, which means that the substitution of soybean oil to palm oil is not very high.
Stretching the timeline, from 2012 to March 2020, domestic palm oil spot and futures prices, the overall stability, the price range remains at 6,000 yuan -8,000 yuan per ton, almost 4 years or so there will be a slight rise and fall cycle.
However, from March 2020, the global price of palm oil has continued to rise, driving domestic palm oil futures and spot prices to soar rapidly. Wang Chen explained that at the end of 2019, domestic soybean stocks were tight, and a large number of soybeans were imported in China in early 2020, driving palm oil prices to rise.
For the recent sharp rise in palm oil prices, it has a lot to do with the international environment. Wang Chen believes that the current turmoil in the Black Sea region has led to poor exports of sunflower oil, coupled with the reduction of soybean production in South America, and it is basically impossible for global oil prices to loosen in the first half of the year.
In addition, the coming months will be a critical period for U.S. bean cultivation, and the U.S. bean market is affected by the weather and planting area. If the weather conditions are bad or the planting area declines, or biodiesel production increases, global oils and fats, including palm oil, will fluctuate sharply over the next three months and oscillate higher.