Indonesia's palm oil market saw little activity on Friday as players retreated on worries over government moves to control olein prices. Traders expect prices to ease next week after a strong run-up. There were no auctions in North Sumatra's Medan or at the state marketing centre in Jakarta.
"There's no sales today. Also people are not keen to sell palm oil because of a stronger rupiah and losses in Malaysia," said a trader in Medan, the main port for palm oil export. The rupiah hit a four-month high on Friday at 8,965 to the dollar.
A stronger rupiah against the dollar makes the commodity traded in dollars cheaper in local currency term. "Prices may ease a bit next week because it's already gained much.
Producers are trying to follow the government's order to keep prices in check so that the export tax will not be increased," the trader said. The government has given palm oil producers until the end of this month to ease local cooking oil prices, which have gained 21 percent since January on surging global crude palm oil prices.
If they fail, the government is likely to raise palm oil export taxes. Crude palm oil is currently subject to a 1.5 percent export tax, while other palm oil derivatives are subject to 0.3 percent.
In Jakarta cooking oil was quoted around 6,950 rupiah ($0.775) a kg, slightly down from 7,000 rupiah on Thursday. "The prices are in line with the government instruction, but in reality it should be around 7,400. No one is selling cooking oil because the market operation is confusing prices," said a trader in Jakarta.
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