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Indonesia imposes mandatory domestic sales on palm oil – minister

Indonesia has imposed a rule starting Thursday for a mandatory portion of palm oil to be sold domestically at a maximum price of 9,300 rupiah ($0.6465) per kg for crude palm oil and 10,300 rupiah per kg for olein, its trade minister said.

The so-called Domestic Market Obligation (DMO) will be applied to all cooking oil exporters and they will be required to sell 20% of their planned export to the domestic market, Muhammad Lutfi told a virtual briefing.

Benchmark Malaysian palm oil futures FCPOc3 surged to all-time highs this week, in part due to a threat by Indonesia, the world’s top producer and exporter of palm oil, to control shipments.

“We want to make sure that the raw materials for the domestic industries will remain here,” Indrasari Wisnu Wardhana, a Trade Ministry senior official told the briefing, noting that amid high commodity prices, producers tend to prefer exports.

Indonesia has sought to curtail a rise in domestic cooking oil prices that have climbed about 40% from a year earlier, in line with high global palm oil prices.

The DMO has been central to a month-long suspension by Indonesia of thermal coal exports that has concerned major coal importers, as it seeks to ensure domestic supply to its power plants.

The government starting this week had imposed an export permit requirement for international palm oil shipments which could be obtained after companies declared their domestic distribution plan for six months.
Source: Reuters (Reporting by Bernadette Christina Munthe, Fransiska Nangoy Editing by Ed Davies)

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