Indonesian palm oil prices fell on Tuesday in line with losses in Malaysia and as Jakarta's decision to raise palm oil export taxes sapped trading interest. In North Sumatra's Medan, the leading port for palm oil exports, crude palm oil sold at 6,800 rupiah ($0.762) a kg, down from 6,823 rupiah last week.
There was no auction on Monday in Medan. In Jakarta, the state marketing centre sold 500 tonnes of crude palm oil at 6,717 rupiah, free on board Teluk Bayer in West Sumatra.
But the centre failed to sell 2,500 tonnes of crude palm oil, free on board Begawan/Dummy, which is used as a benchmark, due to low bids. "Everybody is still worried that the government may increase the export tax again," a trader in Medan said. Last week, the Indonesian government raised the export tax for crude palm oil to 6.5 percent from 1.5 percent and the tariff on RBD palm olein, used as cooking oil, to 6.5 from 0.3 percent in a bid to stabilise prices.
Cooking oil is a staple and rising price is likely to fan inflation. Traders said losses by Malaysian crude palm oil futures also put pressure on prices. Cooking oil in Jakarta was offered at 7,825-7,935 rupiah a kg, down from 8,000 rupiah on Monday. "Malaysia is a bit weak today. There are not too many buyers because they are looking for cheaper olein," a trader in Jakarta said. The tax change also muted trading in the export market, with sellers offering crude palm oil for July shipment at $760 a tonne free on board Begawan. Buyers bid at $750 with no deals reported.