21/05/2026 (The Edge Malaysia) - Indonesian palm oil prices tumbled after President Prabowo Subianto unveiled plans to impose state control over exports of several key commodities, including the edible oil.

The Southeast Asian nation produces more than half of the world’s palm oil and the plan would require all exports to go through a government-created company. The move is aimed at curbing under-invoicing and giving authorities a greater say on price, but also risks alienating buyers.

The slump reflects confusion in the market. Bidders have pulled back from tenders on fears the restrictions may slow down shipments and swell stockpiles, while some sellers have slashed prices to quickly clear supplies before the rules take effect, according to traders.

Daily bids for crude palm oil at Dumai port were as low as 11,777 rupiah (US$0.67 or RM2.64) a kilogram on Wednesday after the policy was announced, about 23% less than a day earlier, said the traders, asking not to be named as they are not authorised to speak to the media.

That translated to a decline of about US$50 (RM198.13) a tonne from prices tendered the day earlier, and is the biggest daily drop in several weeks, they said, Bids on Thursday were even lower at around 8,000 rupiah, the traders said.

“Tender offer prices for Indonesian crude palm oil fell sharply as buyers turned cautious,” said Warren Tay, a trader at Kuala Lumpur-based Eco Palm International Sdn. Indonesian agencies, however, will likely quickly intervene to help the local palm market return to normal, he said.

The Indonesian daily prices refer to physical crude palm oil offered by state-linked plantation groups through the local tender system, where refiners, traders and exporters submit bid for spot cargoes. The price is closely watched as a real-time indicator of domestic supply and demand in Indonesia.

For now, the sharp tumble in Indonesian prices has made its palm cheaper than neighbouring Malaysia. However, in the longer term there’s a risk that exports may not be managed properly, which could spur overseas buyers to switch to rival suppliers in Malaysia, Thailand and Latin America.

Export prices for Indonesian crude palm oil traded at a discount of about US$97.50 per tonne to Malaysian futures on Wednesday, the widest gap since February, according to Marcello Cultrera, a palm trader and chief executive officer of agriculture software company Apricus 8 Sdn Bhd in Malaysia. If the steep discount persists, it could trigger a surge in Indonesian exports, he said.

Benchmark palm oil futures traded in Kuala Lumpur fell as much as 2.5% on Thursday, the biggest intraday decline in two weeks.

Indonesia’s trade ministry will issue regulations on palm oil, coal and ferroalloy exports by Friday, said Trade Minister Budi Santoso, following the decision to centralise all shipments under sovereign wealth fund Danantara. Regulators will honour long-term contracts, but will review them if prices are found to be below global benchmarks, Danantara chief executive officer Rosan Roeslani said.

https://theedgemalaysia.com/node/804518