Indonesia has reportedly exempted palm oil from its banned items of exports — which will spare a large swathe of daily food items from a price hike. Jakarta’s ban will cover refined, bleached, deodorized (RBD) palmolein but not crude palm oil, reports quoting Indonesian officials said.

There was no official word from the Indonesian government on the exemption.

“We still need to see the fine print of the relaxation made by the Indonesian government. However, this is an extremely positive news as almost all imports into India are CPO, which is then refined by port-based refineries. This would come as a relief to both consumers and refiners,” Sanjeev Asthana, CEO, Ruchi Soya Industries Ltd said.

B.V. Mehta, executive director, Solvent Extractors Association, said crude palm oil makes up 84 per cent of palm and pamolein exports. The ban on palmolein can be met by increasing imports from Malaysia.

Shares of FMCG companies sharply dropped on Monday. Frontline stocks such as Hindustan Unilever (HUL), Britannia Industries, Godrej Consumer Products and Marico were down between 4 per cent and 6 per cent on the BSE during the intra-day trading session.

There had been widespread concern that an export ban by the world’s biggest palm oil producer would fan food inflation in India.

Palm oil and its derivative products are used in food products, detergents, cosmetics and biofuels. These are used to manufacture several daily consumption goods such as soaps, margarine, shampoos, noodles, biscuits and chocolates. So, any rise in palm oil prices will push up the input costs across these industries.

India imports about 8 million tonnes of palm oil annually. The commodity accounts for nearly 40 per cent share in India’s overall edible oil consumption basket.

In the last 12 months, palm oil prices have gone up 50 per cent and nearly tripled over the last two years. Sunflower oil supplies and prices have remained volatile amid the Ukraine war.

Sougata Niyogi, CEO – Oil Palm, Godrej Agrovet Limited, said prices will remain high till August-September. “The current conditions are going to keep farmer’s morale high on oil crop, and fuel rapid area expansion across major oil producing states.”

Productivity is going to improve compared with the previous years, which will be reflected in higher income for farmers who have matured plantations, Niyogi said.