InfoSAWIT, JAKARTA - As the number one crude palm oil (CPO) producer in the world, Indonesia has its interests to decide CPO price and it was in a rush to establish Indonesian CPO Exchange. The question remains, would CPO price be decided (by Indonesia)?
In its relevance, Indonesia wants that CPO price in the globe should be decided by Indonesia for being the number one CPO producer in the world. Indonesia produced 47 million tons with the export values reaching US$ 30 billion and mastered 50% of palm oil trade globally.
But what Indonesia wants to be CPO price barometer in the world is blocked by two things.
Head of Exchange and Business Development of PT Kharisma Pemasaran Bersama (KPBN), Andrial Saputra said if Indonesia wants to realize its dream, the main condition is that 60% of CPO should be consumed in the domestic.
For the CPO markets are to export, which means, other countries enjoy it, willing or not, the price is not decided by the biggest producer. The second condition is that there should be transparent data from every stakeholder in this country. “Without transparency, it is difficult to develop and get credibility, capability, and trust from the markets,” he recently said to InfoSAWIT.
In general, the exchange can be established after qualifying three main terms and conditions, they are, price discovery particularly day by day. Without it, the price would not be got and there is no certain and clear period.
The second is that price reference, which means, price established happened for every actor was conscious, had no force to follow, and be the reference for every actor to do transaction. The third is it needs to qualify hedging.
“Stock exchange is the place to control risks of transaction, for instance, using hedging concept, which means, futures and physical collaboration would be the reference for traders to get transaction – buy, hold, and sell,” Andrial said.
He also mentioned, it is not automatically to get price reference though Indonesia established its CPO exchange because when it was released, it needed trust which was reflected by open interest and on-going sessions.
Trust must be got in time, not spontaneous. In the same time, transparency, credibility, and independency in the exchange would be significant points that the exchange could, at least, run. “To decide price, it needs transaction in big numbers. They should be liquid and more than the performance in MDEX (Malaysia Derivative Exchange),” he said.
KPBN itself, Andrial thought, is neutral because the policy that was proposed and published by Ministry of Agriculture was from the government itself. “KPBN fully supports every process,” Andrial said. (T2)
