Palm oil futures jumped 10% to a new record-high as Indonesia expanded its cooking oil export ban to include crude palm oil to ensure domestic supplies were stable, according to Bloomberg.

Indonesia, the world’s biggest cooking oil shipper, initially said the temporary export ban would only apply to refined, bleached, and deodorized palm olein. However, Coordinating Minister for Economic Affairs Airlangga Hartarto said the ban would be expanded to crude palm oil, RBD palm oil, and used cooking oil. The new export ban begins Thursday. 

Indonesia’s export policy has sent the palm oil industry into a tailspin. Prices have been whipsawed, rising one moment as the lack of details from the initial statement had traders fearing that the ban would cover all products, then slumping the next as details emerged that the move would be restricted to certain refined goods. Futures rallied 10% just before the latest announcement.

 It is another example of a policy flip-flop that has raised concerns about Indonesia’s business image. The country is a major commodities supplier and had imposed restrictions on nickel and coal exports in the past. Speculation about what Indonesia may do next keeps the industry constantly on its toes. -Bloomberg

The latest news sent Malaysian Crude Palm Oil futures soaring 10% to a new record high of 7,518 ringgit a ton. 

The export ban is a form of food protectionism that will exacerbate the global food crisis. Indonesia’s decision to add palm oil and various forms of cooking oil to a temporary export ban is roiling the global $50 billion palm oil market. China, Pakistan, Bangladesh, and India are the top importers of Indonesia’s palm olein. 

Indonesia’s government claims the temporary ban does not violate the World Trade Organization’s rules. 

The original announcement of the ban shocked commodity traders worldwide last Friday. One trader said, “this news will certainly create mayhem.” 

Even before Indonesia’s announcement, the Ukraine conflict caused massive disruptions to the global edible oil market. The Black Sea region accounts for 76% of world sunoil exports. Indonesia’s ban could send global food prices even higher. 

Food protectionism is spreading worldwide, including in Argentina has raised export taxes on edible oils. Meanwhile, Moldova, Hungary, and Serbia have banned some grain exports. Russia is only exporting ag products to so-called ‘friendly’ countries. 

Increasing food protectionism is another worry for importing countries (such as ones in the Middle East and Africa) dependent on others. It may spark shortages that could trigger social-economic turmoil. This is already happening in Peru and Sir Lanka. 

In a Wednesday speech, Indonesian President Joko Widodo said that the edible oil export ban would be lifted once domestic demand was fulfilled. No timeline was given when that may occur.