Indonesia and Malaysia agree not to compete over palm oil prices

After a meeting yesterday, Malaysian and Indonesian officials agreed that their countries would not compete over palm oil prices. Malaysia’s PM announced the agreement with Indonesia’s president after their meeting. He said that he and the Indonesian president will determine the price together. The two countries account for roughly 85% of the world’s palm oil production.

Indonesia is struggling to control cooking oil prices at home as producers refer to global prices in their production costs. The Russia-Ukraine crisis has impacted the supply of vegetable oil in Indonesia, making palm oil more expensive. Now, cooking oil ‘mafias’ have formed in the country. After police raided warehouses, they found at least three to be hoarding cooking oil in northern Sumatra.

Indonesia had earlier this year restricted export volumes and capped crude palm oil and olein prices sold at home, but later scrapped the policies. One soup seller in Jakarta told Channel News Asia she has had trouble getting oil for the past few weeks. She must now buy bulk oil, which has no brand and is unpackaged. The seller said she doesn’t know whether the oil is lower quality than premium packaged oil.

The Indonesian president didn’t comment on palm oil to the press. Malaysia’s PM said oil prices were just one of several issues the two leaders discussed. But he maintained that the two countries should determine the price together.

“…because Malaysia and Indonesia are the two countries that control the total palm oil exports”.

SOURCE: Bangkok Post