Indonesia to launch CPO trade on local exchange by end 2023

Indonesia's plans to launch crude palm oil trade (CPO) on a local futures exchange are expected to come to fruition by the end of the year, Didid Noordiatmoko, the country’s commodity futures regulator (Bappebti), told local news outlets Friday.

Indonesia, the world’s biggest exporter of CPO, also said it would issue a new rule in June that would require exporters to trade CPO on local exchanges before shipping their products overseas.

Earlier this year Bappebti announced plans to require exporters to trade CPO with overseas buyers on a local exchange before exporting it out of the country, while exporters of refined palm products were also expected to purchase their feedstock via the exchange.

These measures are intended to not only make export data more transparent but also to create a CPO benchmark price traded in the Indonesian rupiah currency. 

Having its own CPO benchmark pricing by the end of the year would enable the government to use local pricing as its only reference for setting export duties.

At present most Indonesian exporters conduct physical trades with buyers without an exchange, while tenders held by state trading company KPB Nusantara (KPBN) only offer spot physical palm oil volumes and not futures contracts.

For the near term, Bappebti intends the exchange only to handle CPO spot trading, with futures contracts to be launched further down the road.

Indonesia’s production for 2023 is expected to slip by 1% from 2022 to 50.82 million mt, according to earlier GAPKI estimates.

Consumption is expected to slow by around 2.3% from 2022 to 50.76 million mt – 24.342 million mt to cover domestic demand and the rest for export.