Govt urged to open palm oil futures trading

Govt urged to open palm oil futures trading

Jakarta (JP): The Indonesian vegetable oil and fat trade
federation (FAMNI) cautioned the government yesterday against
intervening in the crude palm oil (CPO) trade to push its price
down and proposed instead the opening of the futures trading
Bourse for agricultural produce it closed last year.

The federation's vice chairman Tarmidzi Rangkuti voiced doubts
about a recent government appeal to the joint marketing board of
state plantations in the country to cut their CPO selling price
to Rp 900 per kilogram.

The official appeal will not work as the prevailing price of
Rp 1,000 per kilogram is the outgrowth of strong market demand
shored up by rising consumption.

Tarmidzi warned that official intervention into pressing down
CPO prices would only benefit speculators who would buy from the
joint marketing board at the official price and sell to cooking
oil mills at prevailing market prices.

Cooking oil prices to consumers would remain high, he said,
referring to reports of price hikes in several provinces that
spurred the government to make its appeal.

He ascribed the hikes to rising consumption and rumors of
management streamlining at state oil palm plantations.

As an alternative, Tarmidzi recommended opening a futures
trading bourse for agricultural commodities.

He said Malaysia, the world's biggest CPO producer of six
million tons a year, has opened futures trading in Kuala Lumpur
facilitating producers-consumers exchanges by which consumers
judge their capital needs for future purchases.

Indonesia exported 30 percent of its 3.7 million ton
production last year. (17)