Strengthening Price Discovery Deemed Crucial for Building Domestic Commodity Reference Prices
Amid efforts to strengthen transparency in national commodity trading, Indonesia needs to reinforce domestic price discovery mechanisms so that reference prices increasingly reflect national market conditions.
As the world’s largest palm oil producer, Indonesia holds a strategic position to build a more credible domestic reference price, through trading activity that is transparent, liquid and continuous.
The Chief Executive of PT Jakarta Futures Exchange (JFX), Yazid Kanca Surya, said that a strong reference price is not born of unilateral determination, but rather of transactions that genuinely reflect the interaction between supply and demand in the market.
“Reference prices are built through the price discovery process. When transactions take place openly, involve many market participants, and are conducted continuously, the resulting price will increasingly reflect actual market conditions. It is from this process that credible reference prices are born,” Yazid said in a statement on Tuesday, 4 August 2026.
According to him, strengthening price discovery has become increasingly relevant for Indonesia, which plays an important role in the trading of strategic commodities including palm oil. To date, businesses have largely relied on international benchmarks as price references.
In fact, as the principal producer, Indonesia has the opportunity to strengthen price formation at home, thereby producing references that increasingly reflect the characteristics of the national market.
Yazid said this process cannot be separated from active trading activity. The more transactions conducted through exchange mechanisms with standardised contracts and transparent recording, the more representative the resulting price will be as a reflection of market conditions.
As an illustration, palm oil trading in recent weeks has been dynamic. In the last week of July 2026, the global Olein reference price based on the Malaysian Derivatives Exchange (BMD) FPOL rose 3.52 per cent, from US$1,135 per tonne to US$1,175 per tonne compared with the previous week.
“The increase was driven by a 4.23 per cent rise in Brent crude oil prices, growing demand from China, and expectations of tighter Indonesian palm oil supply,” Yazid said.
Amid these dynamics, Olein trading activity on JFX has maintained its liquidity. During the period from 28 June to 25 July 2026, olein transaction volume reached 67,564 lots with a transaction value of approximately Rp6.85 trillion.