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Indonesia seeks to set its own CPO benchmark price by this year-end
As the world’s biggest palm oil exporter, Indonesia wants to establish its own benchmark crude palm oil (CPO) price by the end of this year to cut its reliance on the Malaysian derivative exchange.
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Seeds of controversy: A worker weighs palm oil seeds at a plantation in Kutamakmur, Aceh, on May 12. The European Union is drafting a deforestation-free regulation that may ban imports of Indonesian palm oil. (AFP/Azwar Ipank)
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s the world’s biggest palm oil exporter, Indonesia plans to establish the country’s own crude palm oil (CPO) benchmark price by the end of this year, aiming to increase transparency in the commodity, the Futures Exchange Supervisory Board (Bappebti) said on Thursday.
Bappebti will first require CPO exports to go through futures exchange effective starting from June this year, said Didid Noordiatmoko, head of Bappebti. He hopes the process can allow regulators to conduct a price discovery after one or two months.
Price discovery refers to a process of finding out a proper price of a commodity needed for a marketplace to function, according to Investopedia.
“Why are we still relying on pricing data from Rotterdam and Malaysia? Our country supposedly can get more value in CPO trading,” he told industry groups during a discussion in Jakarta on Thursday.
“We need to make our own spot and futures market in the future,” he added.
Currently, most Indonesian palm oil exporters conduct sales directly with buyers without going through an exchange, while auctions held by state-run trading services company PT Kharisma Pemasaran Bersama Nusantara (KPBN) only offer physical palm oil and not futures contracts.
Read also: Indonesia achieves high surplus despite lower exports of CPO, iron and steel
