JAKARTA, March 5: Indonesian palm oil market saw little activity on Wednesday as a sharp drop in Malaysian palm oil futures prompted buyers to hold back looking for lower prices. The state marketing centre in Jakarta failed to sell 6,500 tons of crude palm oil it offered in an auction due to low bids.

Producers in North Sumatra’s Medan also did not hold an auction. A dealer said the market was slow as players expected the recent rally in palm oil price would prompt the government to increase the current export tax of between 5-10 per cent up to 25 per cent.

Some buyers want to buy crude palm oil at much lower prices because they expect to pay higher tax next month. But sellers won’t budge, said the dealer at a palm oil plantation in Medan.

Indonesia adjusts palm oil export taxes monthly based on price movements in international markets.

Last month, the government said it planned to impose a 20 or 25 per cent export tax on crude palm oil and its by-products if the international price hit $1,200 and $1,300 a ton.

Malaysian crude palm oil futures hit a record high of a record high of 4,486 ringgit ($1,410) a ton on Tuesday but rumours China could intervene to curb rising prices wiped away the gains.

The benchmark May contract on the Bursa Malaysia Exchange ended down 4 ringgit at 4,095 a ton after going as low as 3,928 a ton on Wednesday In Jakarta, the sharp fall in the Malaysian market also muted trading interest.

Refiners in Jakarta offered refined, bleached, deodorised (RBD) palm olein which is used as cooking oil at 11,750 rupiah ($1.29) a kilogram, down from 12,500-13,000 a kilo on Tuesday.

No one is buying cooking oil although the price has fallen sharply because it is still too expensive. Consumers don’t have much money now, said a dealer in Jakarta.

On the export front, crude palm oil for delivery in May to September was offered at $1,275 a ton But buyers did not bid for the shipment.—Reuters