Indonesian palm oil prices softened on Wednesday, despite gains in the neighbouring Malaysian market, as refiners have enough stocks ahead of the Muslim fasting month of Ramazan. The state marketing centre in Jakarta sold crude palm oil at 7,185 rupiah ($0.763) a kg free on board Belawan, slightly down from 7,198 rupiah a kg on Tuesday.
At local auctions in North Sumatra's Medan, some 750 tonnes of crude palm oil were traded at 7,168 rupiah a kg, down from 7,190-7,222 rupiah a kg on Tuesday. "Refiners had enough crude palm oil for their stock, so prices went lower. Gains in Malaysia did not affect anything," said a dealer in Medan. By the midday break, Malaysian crude palm oil futures edged 0.7 percent higher as crude oil held near a record high and soybean oil extended gains in Asian trade.
The benchmark November contract on the Bursa Malaysia Derivatives Exchange was 18 ringgit higher at 2,518 ringgit ($719) a tonne. Indonesia, the world's most populous Muslim country, will start the fasting month of Ramazan on Thursday and it will run to the middle of October.
In Jakarta, cooking oil was quoted at 7,750 rupiah a kg, barely moved from 7,800 rupiah a kg on Tuesday. "The cooking oil market was very quiet a day before the fasting month," said a cooking oil trader in Jakarta. In the export market, crude palm oil for September shipment was offered at $757.5 a tonne, up $2.5 a tonne on Tuesday without bids from buyers. Sellers offered crude palm oil for October shipment at $750 a tonne, up $5 a tonne from Tuesday and buyers bid at $742.5. However, there were no deals reported.
Indonesia is set to overtake Malaysia as the world's top producer this year with output seen at 17.4 million tonnes, up from 15.9 million tonnes in 2006.
"We predict crude palm oil output can reach 20 million tonnes by 2010 due to better fertiliser and as most palm oil trees reach maturity," said Mukti Sardjono, director of perennial crops at the Agriculture Ministry. "Better roads will also allow oil palm fruits to be delivered to factories faster," he added. Indonesia has 6.07 million hectares of land planted with palm oil.