Indonesian palm oil prices fell on Monday, hit by losses in Malaysian palm oil futures and as players awaited a government announcement on palm oil export tax. At the state marketing centre in Jakarta, crude palm oil was sold at 7,060 rupiah ($0.753) a kg, free on board Boom Baru in Sumatra and West Kalimantan.
The prices fell from between 7,200-7,230 rupiah a kg last week. But the centre, which sells palm oil from state plantations failed to sell crude palm oil from Belawan port in North Sumatra which is the benchmark for the centre's crude palm oil prices.
Producers in Medan, North Sumatra did not trade, watching for a rebound at the Malaysia palm oil futures. "Producers didn't hold auctions today, partly because Malaysia is down today," said a trader in Medan, a key port for Indonesia's palm oil exports.
Malaysian crude palm oil futures were largely unchanged by lunchbreak in lacklustre trade, with the benchmark November contract up 4 ringgit at 2,434 ringgit per tonne ($700).
The contract ended down 9 ringgit at 2,421 ringgit a tonne. In Jakarta, cooking oil for shipment prompt shipment was quoted between 8,100-8,200 rupiah a kg, down from 8,250 rupiah as supplies improved. "We have enough cooking supplies. That knocks prices down," said a cooking oil trader in Jakarta, adding the government's plan to introduce new palm oil export tax also dampened trading.
"It's very quiet today. I think everybody has given in on the export tax issues. It's up to the government," the trader said. The trade ministry has said the government is considering applying a flexible export tax on crude palm oil linked with international prices to prevent any jump in local prices.
The government is considering introducing 9-10 percent export tax, up from the current 6.5 percent if crude palm oil prices rise above $850 a tonne while it would not apply any export tax if prices fell below $500 a tonne.
A decision on the tax is likely to be announced in early September. In mid June, the government raised the export tax to 6.5 percent from 1.5 percent for crude palm oil and another 6.5 percent for palm oil products from 0.3 percent in a bid to stabilise cooking oil prices which had surged more than 30 percent. But cooking oil prices have not come down much. At the export market, sellers offered crude palm oil for September and October shipments at $775 and $745 a tonne respectively.