Indonesian palm oil prices were mixed on Monday, pressured by slow demand with dealers expecting prices to ease further this week on rising output. At the state marketing centre in Jakarta, crude palm oil was sold at 7,163 rupiah ($0.763) a kilogram, free on board Belawan, up from 7,123 rupiah on Friday.
There were no crude palm oil auctions in Medan, the key port for palm oil exports in North Sumatra. "The market is not attractive although Malaysia is gaining. Demand is slow while production is picking up. Prices are likely to ease this week," a dealer in Medan said.
Sellers were reluctant to take positions as the palm oil export tax will change next month, dealers said. Last week, the government introduced a flexible export tax for crude palm oil at 10 percent if international prices are above $850 a tonne, 7.5 percent if international prices are between $750-$849 a tonne and 5 percent if prices are between $650-$749 a tonne.
There were no price quotations on Monday at the export market, reflecting lacklustre trading interest. In Jakarta, cooking oil was quoted between 7,725 rupiah a kilogram, down from 7,800 rupiah a kilo on Friday due to slow demand despite gains in the neighbouring Malaysia market.
Malaysian crude palm oil futures rose in light trade with the benchmark November contract up 19 ringgit to 2,490 ringgit ($709) a tonne by lunch break. "Cooking oil demand is always slow ahead of the Muslim fasting month. People only buy when they really need it," a cooking oil dealer in Jakarta said. Indonesia, the world's most populous Muslim country, will start the fasting month of Ramadan on Thursday and it will run to middle of October.
Separately, the government decided to set aside 10 million litres of cooking oil which will be sold to the poor at subsidised price during and after fasting month.
"The subsidised cooking oil will be sold in the middle of the fasting month and two weeks after Eid al-Fitr," said Ardiansyah Parman, director general of domestic trade at the Trade Ministry. The government will subsidise cooking for the poor by 2,500 rupiah a litre and each family is entitled to buy 2 litres, he said.