Bulog suspends its CPO buffer-stocking

Bulog suspends its CPO buffer-stocking

JAKARTA (JP): The National Logistics Agency (Bulog) has
decided to suspend its procurement of crude palm oil (CPO) for
its buffer-stocking scheme due to favorable price developments on
the domestic market, its chief said.

Bulog Chairman Beddu Amang said the scheme was no longer
needed at the moment because prices of CPO and olein -- the main
raw materials for cooking oil -- were "back to normal".

"Bulog has not bought CPO from producers lately because market
prices are steady," Beddu told reporters last week.

"We don't see the need to add to our bufferstock as yet," he
added.

Earlier this year, Bulog asked private and state CPO producers
to participate in its buffer-stocking scheme designed to bring
down domestic cooking oil prices from around Rp 1,600 (70 U.S.
cents) in June to Rp 1,400 by December.

The scheme needs a bufferstock of 75,000 tons of CPO, with
equal proportions expected to come from the government and
private sectors.

The amount of stock was adjusted with the production cycle of
CPO. Bulog targeted 20,000 tons of CPO in July, 25,000 tons in
August and 30,000 tons in September.

But reports indicate that the amount targeted has not been
reached, with only state producers sticking to their commitments.

Reluctance

Private producers have been reluctant to contribute their
share of the commitment, saying they were bound by export
contracts with foreign buyers.

High CPO prices on the international market during the June-
August period were also said to have urged private producers to
export their CPO rather than sell it to Bulog.

However, when prices started falling in September, private
producers began to hold back their exports.

Minister of Agriculture Sjarifudin Baharsjah accused them at
the time of shifting their sales to Bulog only when international
prices fell.

He said private CPO producers were now demanding the price
agreed upon when the buffer-stocking scheme began, which is
higher than current price levels.

Beddu was quoted by Antara Saturday as saying that the factory
price of olein was presently Rp 1,410 per kilogram. A few months
ago, he said, the prices were even lower, reaching Rp 1,350 per
kg.

Beddu said Bulog's CPO bufferstock presently reaches 20,000
tons. This amount, he said, was procured from state and private
CPO producers as part of their commitment to the bufferstocking
scheme.

He said Bulog also has about 86,000 tons of imported olein
from Malaysia to anticipate escalating cooking oil prices in the
future.

Beddu said that if CPO prices went up again, Bulog would use
its stock to supply the domestic market.

"We are prepared for any fluctuations that might occur. We
will add the market's stock when necessary," he said. (pwn)