The Jakarta Futures Exchange plans to relaunch trading of robusta coffee and crude palm oil contracts to benefit from higher prices, the exchange's president director said on Monday. The exchange plans to trade the contracts in the second quarter of 2008 after it stopped trading both contracts in 2000-2001 due to small volumes, said Hasan Zein Mahmud.
"Futures trading in commodities has great potency now. There is also a growing need for farmers and exporters to hedge," he said. Price of robusta coffee - used in instant coffee - on London futures hit a record high above $2,000 this year on supply concerns.
Malaysia palm oil futures have also consistently hit multi-year highs this year, boosted by strong demand from both energy and food sectors, as well as a rally in crude oil prices.
The Jakarta Futures Exchange is re-entering a crowded market. Malaysian palm futures are the benchmark for the industry, and a palm futures contract launched in June by Singapore's futures exchange and based on Indonesian palm oil has failed to attract much interest.
The exchange also plans to trade cocoa and coal contracts to increase revenue from commodity futures trading, said Mahmud, without elaborating on when this might occur. The exchange currently trades olein and gold contracts but it gets most of its revenue from trading financial contracts.
It expects to book a net profit of 7-8 billion rupiah this year, down from 10 billion rupiah ($1.07 million) in 2006 due to an expected increase in operating costs, Mahmud added.
Indonesia is set to overtake Malaysia as the world's top palm oil producer, with output seen rising to 17 million tonnes this year. The Southeast Asian nation is also the world's second-largest producer of robusta after Vietnam.
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