Indonesia’s Icomex expected to complement Bursa Malaysia FCPO as a palm oil benchmark

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Icomex and FCPO as benchmarks

Highlights

Indonesia will launch the Indonesian Commodity and Minerals Exchange (Icomex) on 4 Jan 2027 to establish domestic reference prices for palm oil, nickel, tin and coal.
Palm oil contracts on Indonesian exchanges are currently illiquid, prompting a new presidential mandate to call for support from local and international participants and improvements to market data and transparency.
Icomex is expected to complement, not replace, the dominance of Bursa Malaysia Derivatives’ FCPO, which still accounts for 99% of global crude palm oil futures volume, with 19.6 million contracts traded in 2025.

This article was translated from the original. Read the original version by our correspondent here.

Icomex launch plan and the conditions for influencing prices

As reported by The Edge Malaysia, Indonesia plans to establish the Indonesian Commodity and Minerals Exchange, or Icomex, with trading scheduled to begin on 4 Jan 2027, following President Prabowo Subianto’s announcement in his 2027 budget speech in August. Under the supervision of the Financial Services Authority, or OJK, the government aims to establish Indonesian reference prices for key commodities, including nickel, crude palm oil, tin and coal.

Mohd Saleem Kader Bakas, Bursa’s director of derivatives and carbon markets, said the effectiveness of any futures contract or benchmark ultimately depends on liquidity, breadth of participation, transparency, confidence in regulation, clearing infrastructure and market acceptance over time. He added that price discovery should not be viewed as price control, but rather as a transparent mechanism that reflects market fundamentals, expectations and risk.

David Ng, senior proprietary trader at IcebergX Sdn Bhd, also sees the plan as a positive step, given that Indonesia is the world’s largest palm oil producer and exporter. However, he said being the largest producer does not necessarily confer the greatest pricing influence, as building the confidence of international markets takes time.

Suresh Mookiah, deputy CEO of the Jakarta Futures Exchange, said the Indonesian government’s primary goal is to ensure commodity prices are more influenced by transactions conducted domestically, particularly through the exchange. He said the experience of tin trading on JFX, which handles export transactions and domestic sales, supports confidence that the new exchange can increase its influence over commodity prices.

According to him, palm oil contracts on the Indonesia Commodity & Derivatives Exchange are currently illiquid, prompting government intervention through a new presidential mandate to attract support from local and international industry participants. He also said the new exchange is expected to provide more accurate market data, such as production and export figures, thereby improving transparency for buyers, sellers and the trading community. Suresh added that Danantara Sumberdaya Indonesia, which began operations on 1 Jun 2026, could support this effort through its mandate to strengthen transparency and governance and optimise the value of Indonesia’s strategic commodity exports.

Impact on FCPO and regional benchmark competition

The prevailing view among market participants is that Icomex’s emergence is more complementary than a direct threat to Bursa Malaysia Derivatives Bhd’s dominance in global palm oil benchmarks. Suresh said the existence of multiple exchanges could create arbitrage opportunities between Indonesia and other markets, much as West Texas Intermediate and Brent crude oil contracts continue to be widely used for different market purposes.

Ng said he does not expect BMD to lose its position in the near term, given its decades-long track record, established liquidity and international recognition as the global palm oil benchmark. Indonesia’s influence in the physical market may gradually strengthen its own price benchmark, he said, but the long-term landscape is more likely to feature several benchmarks serving different markets than one exchange replacing another.

Mohd Saleem said BMD remains focused on strengthening FCPO’s relevance as a trusted global benchmark, while acknowledging that other palm oil contracts can coexist when they meet different market needs or domestic objectives. He said market participants will continue to favour contracts that offer liquidity, reliability, transparency and effective hedging utility. Bursa will therefore continue to improve access, market depth and FCPO’s value to the global palm oil ecosystem.

FCPO, with a contract size of 25 tonnes, has been actively traded since October 1980, and all FCPO physical deliveries have been required to be certified under the Malaysian Sustainable Palm Oil scheme since 1 April 2021. According to Bursa, FCPO continues to account for about 99% of crude palm oil futures volume traded on global exchanges, with 19.6 million contracts traded in 2025, equivalent to 490 million tonnes of crude palm oil.

Ng said Malaysia had an early start in developing the palm oil futures market and, over several decades, built strong participation from international traders, producers and refiners. He added that support from ecosystem agencies such as the Malaysian Palm Oil Board and the Malaysian Palm Oil Council has also helped build market transparency and confidence through research, market information, and regular supply and demand data.

At the same time, the RBD palm olein futures contract on the Dalian Commodity Exchange, launched in 2007, grew to become the world’s most actively traded palm oil derivative contract by volume, even though China is not a commercial palm oil producer. This shows that benchmark dominance is determined not only by physical production, but also by the market’s trust in price discovery and risk management mechanisms.

In our earlier article on Malaysia’s lower crude palm oil (CPO) reference price for November, we discussed how the reference price was revised down to RM4,323.78 per tonne from October. Even so, it remained above the RM4,050 per tonne threshold, keeping the export duty at the maximum rate of 10% and maintaining stable export costs as regional competition continues to be monitored.

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