JAKARTA, April 27- Indonesia's Economic minister announced on Wednesday that the country's export tires on raw materials for cooking oil had been expanded to include crude and refined palm oil, causing frenzy and shock in the markets.
The announcement reversed the minister's prior remark that only refined, bleached, and deodorized palm olein would be affected by the export prohibition.
In a brief statement, Airlangga Hartarto stated the modification was made "in accordance with the president's decision and after taking into account the input and perspectives from the people."
For now, President Joko Widodo stated that people's desire for affordable food outweighs concerns about the country's financial well-being."
" Of course, I will relax the export prohibition after domestic demands have been addressed since I recognized the government needs taxes, foreign exchange, and a trade balance surplus, but addressing the people's basic necessities is a more vital priority," he stated.
The president of Indonesia, known as Jokowi, stated the country has the capacity to meet domestic demand and that it was "ironic" that the country was experiencing cooking oil shortages.
Indonesia deployed naval ships and soldiers in an effort to prevent illegal shipments of palm oil ahead of the ban.
According to Navy spokesperson Julius Widjojono , the new rules were set to go into effect at midnight local time (1700 GMT) and the navy and other authorities had been told to increase patrols of Indonesian waterways to ensure compliance.
Some market participants were concerned that exporters in Indonesia, the world's largest producer of palm oil, would be unable to get their products onto ships in time before the embargo went into effect, which caused palm oil futures on the Malaysian exchange to rise by 9.8% on Wednesday.
After Indonesia expanded its embargo to include CPO, US soy oil futures soared more than 4% to a record high.
It was not clear if the latest policy change had been communicated to palm oil companies.
Shocking developments have been reported by industry sources and merchants, who requested anonymity due to their sensitive nature.
For the sake of reining in pricing and avoiding harm to the palm business, a palm industry insider has remarked that this is a "dramatic move."
"These people are insane. Indonesia's policy reversals have cost us dearly. The price of every kind of vegetable oil is surging. It's difficult to obtain hold of any vegetable oil in time for May's shipments "A New Delhi-based trader for a worldwide trading firm said this.
Customs declarations must be made by April 27 at the latest for exporters to be allowed to transport their goods, according to a new commerce ministry regulation announced on Wednesday.
According to the regulation, the export ban will be reviewed monthly or whenever necessary.
The Indonesia Palm Oil Association (GAPKI) secretary general, Eddy Martono , said earlier on Wednesday that the industry was trying to "act as usual while continuing to monitor market movements.".
Eddy said that exporters could not have rushed their items out of Indonesia because of the short notice given by President Joko Widodo on Friday evening.
Everything would've been chartered by then, so getting a vessel quickly was out of the question.
Restrictions in Indonesia have pushed up the costs for edible oils around the world because of factors like drought and shortages following the Russian invasion of Ukraine's largest crop-producing region.
Indonesia's prohibition on palm oil exports is unlikely to endure more than a month because of the lack of storage facilities and the growing demand from customers to resume shipments, industry officials said.
Bans on bulk cooking oil will be in force until the price drops to 14,000 rupiah ($0.9720) per liter.
Reynaldi Sarijowan , a senior official of Indonesia's traditional market traders' association, said on Wednesday that bulk cooking oil prices in Jakarta were between 19,000 and 20,000 rupiah ($1.32 and $1.39) per liter.
As a result of the export prohibition, small farmers in Riau province on the island of Sumatra have already seen the price of palm oil fruits fall significantly. They fear that palm oil firms would cease purchasing from independent farmers.
The current exchange rate is $1 = 14,404,0000 rupiah