Monday, November 24, 2008

CPO Price Dictator (If Any)

Khudori, in his op-ed in Kompas, lamented that:
We are indeed the world largest CPO exporter, but the price of Indonesian CPO has been dictated by Rotterdam spot market and Kuala Lumpur future market.
and he concluded
Last, as second largest CPO producer after Malaysia, Indonesia should be taking important role in the searching and making of product's price, not dictated by others.
Well, of course the equilibrium price is determined by not only supply (where Indonesia belongs to), but also demand (the rest of the world whose growth has been slumped). And how are you gonna "take a role" in making up the price? Reducing the CPO production, or setting up a cartel with Malaysia? It might not work either, since, perhaps, there are numerous substitute for CPO. I don't know.

By the way, does anyone know how much does the palm cooking oil price in Jakarta cost lately? Palm cooking oil consumer may not be happy, if you cut the CPO production.

Now which one is which?

1 comment:

  1. True, Indonesia is the second biggest producer, in the sense that the coconuts are grown in the Indonesian territory. But many (most?) of the plantations are owned by Malaysian companies, which HQ are in KL. That makes it even harder to 'play bigger role.'

    Not that it is impossible, of course. If you have the money, just buy the ownership from the Malaysians, as the first step. Now, does anybody have the money?

    (Before someone calls for nationalization, still the money question needs to be answered first).