Indonesian palm oil prices rose on Friday lifted by gains in Malaysia's palm oil futures ahead of a government decision to raise crude palm oil export taxes.
In North Sumatra's Medan, the leading port for palm oil exports, crude palm oil was traded at 6,915 rupiah ($0.765) a kilogram, up 1.34 percent from 6,823 rupiah a kilogram on Thursday.
"Traders are keen to sell their palm oil since prices are up in Malaysia," said a trader in Medan, adding that they sold some 500 tonnes of crude palm oil. Malaysian crude palm oil futures ended 2.4 percent higher on Friday on the back of gains in the US soybean oil market and firm crude oil prices.
The benchmark third-month August contract on the Bursa Malaysia Derivatives Exchange settled up 57 ringgit, or 2.4 percent, to 2,425 ringgit ($701) a tonne, after hitting an intraday high of 2,441 ringgit.
Cooking oil in Jakarta was traded at 7,900 rupiah a kilogram, up nearly 3 percent from 7,600 rupiah a kilogram on Thursday amid government pressure to control rising cooking oil prices.
On Friday afternoon, the Indonesian government decided to raise the export tax for crude palm oil exports to 6.5 percent from 1.5 percent. It also increased the crude olein export tax to 6.5 from 0.3 percent. The new taxes are effective from Friday and are aimed at increasing supplies in the domestic market, Chief Economics Minister Boediono said. Cooking oil is a staple and rising prices are likely to push inflationary pressure.
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