16/11/2010 (Tempo Interactive) - TEMPO Interactive, Jakarta:Palm oil businessmen have suggested to the government that the rupiah currency be used as reference for crude palm oil (CPO) prices, said Joko Supriono, the Indonesian Palm Oil Businessmen Association (Gapki) secretary, in Jakarta on Monday.

CPO prices in the past were set by the Rotterdam stock exchange by referring to the US dollar. Indonesia should actually be the reference for CPO prices as 40 percent of the world’s palm oil comes from here. The use of the rupiah will help local industries during palm oil transactions.

“So we won’t need to depend on other countries anymore. Today, we must wait for reports from Rotterdam to plan long-term sales,” said Bambang Aria Wisena, Gapki Chief in charge of organizations. To become the world reference, the Indonesian market must be reliable, including in providing transparent date concerning the supply, production, consumption, and growth.

Meanwhile, the Indonesian stock exchange continues to grow. If this trend continues up to a certain volume, Indonesia can become the price referral for this world commodity. “If the volume is big enough to be used as reference, we can be the reference for international palm oil price,” Bambang said.

It is not just the industry which must be transparent, but also the government, the business community and other parties must be ready to be transparent oi they want to be the price referrals. Bambang said this is hard to achieve. The data in the local market still shows that they are far transparent.

CPO prices have risen beyond expectations during the past few months. As of November, CPO is valued at US$ 1.100 per ton. Earlier, the price was not expected to exceed US$ 800 per ton. Climate change and speculations were assumed to be the cause of the price increase.

At that time, the US$ 800 per ton prediction was in reference to the world’s supply of vegetable oil. However, recent calculations showed that vegetable oil supplies cannot meet the demand due to failed harvests in some areas. The lack of trust in dollars also caused speculation, triggering the rise of CPO prices.