Indonesia Palm Oil Shares, Rupiah Rattled by Export Ban

PALM OIL - JAKARTA. Shares of some of Indonesia's biggest palm oil companies slumped on Monday, while the rupiah headed currency falls in Asia, after the government announced it would ban palm oil exports later this week to help control domestic cooking oil prices.

Indonesia, which is the world's top producer and exporter of the edible oil, sent a shockwave through markets last Friday by announcing the ban from April 28, which could further inflame surging global food inflation.

Meanwhile, shares of palm oil companies in rival exporter Malaysia jumped as palm oil futures rose to their highest since early March.

The rupiah, which had been relatively stable this year, buoyed by record high Indonesian exports, fell as much as 0.65% on Monday.

Trading in the currency was affected by the export ban as well as hawkish comments on tightening monetary policy by U.S. Federal Reserve officials, the head of Indonesia's central bank monetary management department Edi Susianto said.

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"Of course, BI (Bank Indonesia) ensures that we will be in the market ... to maintain that the rupiah exchange rate does not move with very high volatility that has the potential to disrupt the market mechanism," he told Reuters in a text message.

Indonesia's Astra Agro Lestari and Triputra Agro Persada suffered share losses of more than 6%. Salim Ivomas Pratama and Sinar Mas Agro Resources and Technology also dropped, while shares of Singapore-listed Wilmar International saw a more limited fall.

Malaysian companies that registered share price gains included FGV Holdings, Sime Darby Plantation , and IOI Corp. Malaysia is the world's second-biggest palm oil exporter.

Indonesia's exports of palm oil and its derivatives usually amount to $3 billion a month, according to some analyst estimates.

The resource-rich country has ridden a boom in exports since last year on the back of an upswing in global commodity prices, but its government has also been scrambling to try to control jumps in local food and energy prices.

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"The recent cooking oil policy has created concerns about the current account outlook as CPO (crude palm oil) is a major Indonesian commodity," Jakarta-based Trimegah Securities economist Fakhrul Fulvian said, commenting on the rupiah's fall.

"The government needs to adjust this policy as limiting exports will put the economy in more harm than good," he said, suggesting authorities provides more cash transfer to help the poor cope with high commodity prices instead of halting exports.