Thailand Temporarily Halts Crude Palm Oil Exports to Regulate Domestic Supply

Key Takeways

• In response to escalating palm oil prices due to reduced output from drought and crop disease, the government has temporarily halted crude palm oil exports. The Ministry of Commerce is encouraging retailers to stabilize prices and offer promotions to ease consumer burden. They are also striving to balance farmer income with consumer oil prices. Minister Pichai Naripthaphan attributes recent price hikes to decreased palm fruit production affecting market supply.
• The Ministry plans to ensure fair prices for farmers and reasonable consumer costs by potentially limiting crude palm oil exports and its use in biodiesel. This aims to redirect supply toward consumer needs amid the shortfall expected to hit its lowest between November and December. Currently, palm fruit prices are 8-9 baht per kilogram, with bottled oil priced 43-48 baht. Normal production is anticipated by January 2025.
• Vendors note sharp cost rises, with palm oil previously costing 520 baht per dozen now at 690 baht. Bottled oil prices in stores rose by one baht, now 46-47 baht depending on the brand. Vendors buying large tins face supply challenges, with prices reaching over 50 baht in some years. Despite these increases, vendors strive to keep products affordable without further price hikes.

In response to the rising prices of palm oil, driven by decreased production due to drought and crop disease, the government has announced a temporary halt on crude palm oil exports. The Ministry of Commerce is encouraging retailers to stabilize prices and offer promotions to help alleviate the burden on consumers. Simultaneously, they endeavor to balance the farmers’ income from palm fruit with consumer prices for cooking oil. Pichai Naripthaphan, the Minister of Commerce, explained that recent price hikes are a result of reduced palm fruit output, impacting market availability. The Ministry’s goal is to ensure fair pricing for farmers while avoiding excessive costs for consumers purchasing bottled palm oil.

As a short-term measure, Pichai has instructed the Department of Internal Trade to consider limiting crude palm oil exports and, if necessary, restricting its use in biodiesel production to direct more supply towards consumer needs. The production shortfall, linked to past droughts and disease, is anticipated to reach its lowest point between November and December, with current palm fruit prices ranging from 8-9 baht per kilogram. Production is expected to return to normal by January 2025.

At present, bottled palm oil prices range from 43-48 baht per bottle, depending on the stock batch timing. Vendors report a sharp increase in the cost of palm oil. Previously priced at 520 baht per dozen or 43 baht per bag, it has recently jumped to 690 baht per dozen or 57 baht per bag. They note that bottled palm oil prices in convenience stores have risen by about one baht per bottle over the past week, now ranging from 46-47 baht depending on the brand. Vendors purchasing palm oil in large tins are also experiencing challenges obtaining supplies, with prices exceeding 50 baht per bottle in some cases. Despite these price increases, vendors have refrained from further hikes, aiming to keep their products affordable for customers.

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