Abstract
Palm oil fell slightly in 2023, losing more than $100 between January and December, to end the year just above $800/tonne. These prices would have seemed staggering five or twenty years ago, when prices were half that level and no one had anything to say about it. The new price equilibrium illustrates what could be one of the paradoxes of the period: a commodity can be both expensive and plentiful. The uncertainty surrounding the logistics of supply since the Covid years, the destabilising effects of the war in Ukraine on the supply of sunflower oil, which competes with palm oil for a number of food uses, and the very sluggish growth in production in the two giants of the market, Indonesia and Malaysia, have all combined to support prices at their highest level for nearly four years. To the uncertainties of the market, politics is adding a little disorder. During the spring of 2023, Indonesia, as in the previous year, introduced export restrictions on a one-off basis, in order to contain domestic inflation ahead of the fasting month of Ramadan and the Eid holiday period, which had the effect of depriving world exports of around 2 million tonnes. For its part, the European Union's biofuels directive now excludes palm oil from the list of eligible products, because of its impact on indirect landuse change and, ultimately, on greenhouse gas emissions. Its provisions against imported deforestation also target palm oil, alongside other products, attracting the wrath of producer countries. A few years ago, palm oil was considered one of the few relatively free and competitive markets for agricultural raw materials. Palm oil is now as much a topic of discussion in Geneva at the WTO's dispute settlement body as it is in the trading rooms of Kuala Lumpur and Rotterdam.