With aims to secure a steady flow of palm oil exports from Asia toward the EU, Indonesia and Malaysia are sending a joint delegation to Europe to gather more information and present their views on the bloc’s future policy regarding the commodity. A new ban on deforestation-linked commodities may block future imports of palm oil from the two countries.

All the involved players, Indonesia, Malaysia and the EU, have signaled that the future of free trade for palm oil is all but certain.

Indonesia has suspended half of palm oil export permits to maintain domestic supplies during the country’s upcoming Islamic festivities in the nation. Meanwhile, Malaysia has announced it will consider retaliation moves – in the form of export cuts – to restrict palm oil sold to the EU, in case the bloc moves forward with the deforestation regulation.

Meanwhile, the EU is inching closer to approving a new deforestation regulation, which would cut deforestation globally by not allowing the import of products from at-risk areas.

Last January, the EU environment committee cleared the path for a momentous vote on the issue, which will happen in the following months.

Amid these developments, vegetable oil prices have been in a relentless downward trend since March 2022. The FAO’s Vegetable Oil Price Index went down 2.9% in February, with oil prices standing 25% lower than a year ago – the UN body states that there is a “subdued global import demand” for palm oil.

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