Indonesia lifted a three-week ban on palm oil exports on Monday but exporters and traders claim more clarity is needed on the attached new regulations before the edible oil starts flowing out of the country.

Indonesia’s President Joko Widodo said last Thursday that palm oil exports from the country would resume this week.

The country’s Trade Ministry on Monday issued rules stating that companies must obtain an export permit that would be granted only to those able to meet their domestic market obligations, but details on how much of the palm oil must be held back remained unclear.

This has led to both exporters and importers holding off on lining up new deals until they are able to obtain further clarity on who can export the products, and what quantities will be available, traders told Reuters.

Some producers are reported to have resumed exports, although this has mostly involved pending quantities that were held back during the ban.

Under the domestic market obligation, Indonesian palm oil producers are required to sell a portion of their products locally at a set price level below that of export prices.

When the ban was implemented in late April, the Indonesian government claimed that many producers were ignoring their domestic market obligations to take advantage of soaring prices in the international edible oils markets.

The ban was issued as a means to try to ensure local supply but is said to have failed at easing pressure on domestic edible oil consumer prices despite the market being flooded with palm oil.

At the same time, it hit producers deep in the pocket, especially the country’s many small, independent producers, as refiners stopped accepting supplies because their palm oil storage had filled up.

A Singapore-based vegetable oil trader told TradeWinds that meetings between the trade ministry and the palm oil industry have been taking place in Jakarta and he expects that the uncertainty should be resolved quickly.

Indonesia is the world's largest producer of palm oil, responsible for supplying nearly 60% of the global market. Neighbouring Malaysia supplies almost all of the rest.

Demand for palm oil has strengthened significantly since Russia’s invasion of Ukraine, which has wreaked havoc in the edible oil markets.

The Ukraine crisis has effectively removed the world’s largest sunflower oil producers from the market, while an ongoing drought is curtailing the supply of South American soybean oil.

Crude palm oil was being offered in India at about $1,765 per tonne for May shipments prior to the Indonesian ban. Despite this high price — palm oil prices had risen by 38% since January — it was still trading at a significant discount to the $2,100 per tonne for crude sunflower oil. Crude soybean oil was offered at around $1,930 per tonne.

Ordinarily, palm oil is the costliest of the three commodities.

The ban also created what Bloomberg described as demand destruction, with global palm oil futures in Kuala Lumpur falling to MYR 6,052 ($1,378) per tonne on 20 May.

The shift towards palm oil prior to the Indonesian ban changed the trading patterns of the tankers that carry edible oils.

As Indian and Chinese sunflower oil imports from the Black Sea switched to South East Asian palm oil, coated product tankers and stainless-steel chemical tankers in the smaller size segments switched from long-haul to short-haul voyages.

Voyages from South East Asia to China or India are considered regional and can be completed within days, as opposed to the long-haul slog from the Black Sea, which takes several weeks.

Chemical tanker sources in Singapore told TradeWinds that despite the many disruptions in the edible oils markets, and the drop in tonne-miles, this did not impacted tanker rates, which have remained firm.

This was credited to strong demand in the clean petroleum products trades, where shippers continuing to shun ISO tank containers due to congestion issues and freight rates in the liner trade.