Indonesia plans to trade crude palm oil (CPO) on a local futures exchange scheduled for launch by June, Reuters reports.
Only spot trading in the rupiah currency for direct CPO exports would be traded on the exchange initially, Didid Noordiatmoko, head of the commodity futures regulator, Bappebti, told reporters.
If successful, the exchange would add CPO derivatives and future contracts further down the line, he added.
The country had initially planned to require overseas buyers of CPO to make their purchases via the exchange, along with exporters of refined products, the 4 May Reuters report said.
Most palm oil trades in Indonesia were currently carried out directly between producers and buyers, and auctions held by state trading company KPB Nusantara only offered physical palm oil and not futures contracts.
The country does not currently have its own CPO reference price, instead referring to the Malaysia Derivatives Exchange (MDEX) in Malaysia, CIF Rotterdam prices in the Netherlands and the Indonesia Commodity and Derivatives Exchange (ICDX) in Indonesia, according to a 3 March Asia News Network report.
The government was expected to issue a regulation regarding the exchange later this month, AgriCensus reported Didid as saying.
“I’m optimistic that the regulation will be released at the end of May so that we can start appointing an exchange in early June, and CPO can start getting traded at [the] end [of] June and price discovery can take place in the next two to three months,” Didid was quoted as saying in the 5 May report.
The selection of delivery points for cargoes continued to be an issue, market participants told AgriCensus, due to Indonesia’s size and number of ports.
While Dumai and Belawan are typically seen as the reference for Indonesian exports, ports in other provinces of Indonesia also handle a substantial volume of export flows, and prices can vary across ports, according to the report.
Participants in industry engagement sessions had also requested the inclusion of more ports other than Dumai and Belawan.
In addition, the selection of the exchange was an issue, with the Jakarta Futures Exchange (JFX) and the Indonesia Commodity and Derivatives Exchange (ICDX Group) seen as key contenders.
Another potential contender could be KPBN itself, a source told AgriCensus.
“Some industry associations and market players (at the industry engagement sessions) were suggesting using KPBN as the exchange, as there are some doubts with JFX and ICDX being privately owned,” the source said.