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Indonesia mulls more frequent setting of crude palm oil reference price

Indonesia mulls more frequent setting of crude palm oil reference price

People ride on a motorbike passed the trucks with palm oil fresh fruit bunches queue for unloading at a factory in West Aceh, Indonesia, May 17, 2022. (File photo: Reuters/Antara Foto/Syifa Yulinnas)

JAKARTA : Indonesia is considering setting its crude palm oil (CPO) export reference price every two weeks instead of monthly, a senior trade ministry official said on Wednesday (Jul 6), aiming to adjust quicker to fast-changing international market prices.

The government currently sets a monthly reference price based on Indonesian, Malaysian and European crude palm oil prices. That price is used to determine the palm oil export tax and levy each month.

"Within a month the (global) price can be volatile, we are considering to set the export reference price by every two weeks," senior official Veri Anggrijono told media on Wednesday.

The Malaysian benchmark palm oil futures fell 22 per cent in June and have slumped more than 20 per cent so far in July, a result of Indonesia boosting exports and expectation of Malaysian production increasing, while global demand is sluggish amid recession concerns.

Veri did not give a time frame for when a decision would be made, but said authorities were hearing views from stakeholders, government bodies and industry participants about the proposal.

He said some businesses might find the two-week period burdensome as they may need to adjust their contracts at the same frequency.

Indonesia currently charge a maximum US$288 a tonne for export tax and until Jul 31 will charge a maximum US$200 a tonne export levy for when the reference price exceeds US$1,500 a tonne.

Source: Reuters/rc

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