The Jakarta Futures Exchange on Tuesday launched the nation‚Äôs first organized physical market for crude palm oil, which will be traded exclusively online, in an attempt to create a new price benchmark, a JFX executive said.
Trade Minister Mari Elka Pangestu and State Minister for State Enterprises Sofyan Djalil attended the debut at the Four Seasons Hotel in Jakarta and rang the bell that kicked off online trading of the commodity.
‚ÄúAlong with the competitive global CPO market, trading CPO through the JFX offers local industries the opportunity to directly sell their products.‚ÄĚ said Hazan Zein Mahmud, JFX‚Äôs president director, on Tuesday.
‚ÄúAn independent price discovery made through the JFX would create a commodity spot market to provide optimum services and global accessibility,‚ÄĚ Hazan said.
He said that if the wider domestic physical CPO market grew, it could become another barometer for the global market. Malaysia and Rotterdam are currently the benchmarks for CPO prices.
The nation is the second largest exporter of the commodity with a global market share of 29.3 percent while accounting for 48 percent of total production. Indonesia exported 14.3 million tons of CPO worth $12.4 billion in 2008. The country‚Äôs total production is expected to rise 6.7 percent to 20.8 million tons this year, up from 19.5 million tons in 2008.
Hazan said that thus far only state-owned plantation firm PT Perkebunan Nusantara and state agro-industry company PT Rajawali Nusantara Indonesia were selling CPO using the JFX‚Äôs online trading system. Sofyan said trading through Perkebunan Nusantara‚Äôs joint marketing offices would be halted because its model was less advanced than that offered by the JFX.
Perkebunan Nusantara produces about 2.5 million tons of CPO per year, of which it had been auctioning 20 percent through its joint marketing offices, Sofyan said. ‚ÄúThe government may also consider incentives for private CPO producers to join JFX trading,‚ÄĚ he added.
Some of the larger private CPO producers include PT Astra Agro Lestari, PT Bakrie Sumatera Plantations and PT London Sumatera Plantations as well as units of the Salim Group.
Hazan said each lot consisted of 500 tons of CPO and that there would be five sessions per trading day, with a transaction fee of Rp 1 per kilogram. He also said companies trading on the exchange were required to give bank guarantees of Rp 500 million ($48,000) to anticipate defaults, both for payment and delivery. Duty on CPO exports will be maintained at 3 percent in July.