Asia palm oil market seen firm on data, supply
Asia palm oil market seen firm on data, supply
KUALA LUMPUR (Reuters): Asian palm oil prices are expected to rise this week on expectations of bullish export data and tight supplies, regional traders said.
Trading would also depend on currency movements, they said, adding that buyers were likely to cover their positions in the wake of weaker ringgit and rupiah.
"Malaysia's good export data is quite inspiring and it looks like supplies in Indonesia are tightening," said one trader in Singapore.
Cargo surveyors, SGS (M) Sdn Bhd and Caleb Brett are expected to release Malaysia's export figures for the whole of June on Tuesday.
Traders said market sentiment had improved slightly over the past week owing to the higher Malaysian exports in the first 25 days of June.
"Technically the market is better and there has been some short covering, but the main issue will still be the currency," another trader in Singapore said.
"As long as the ringgit stays below the 4.0 (per dollar), the palm market is likely to stay firm," said a Malaysian trader who expects more shortcovering and refiners' buying in the physical sector.
At 0345 GMT, the ringgit was quoted at 4.06 to the dollar. Indonesian traders are expecting prices to be firm as supply is tight.
Ex-factory prices are expected to rise above 5,200 rupiah/kg in Jakarta.
Indonesia traders until last Friday have been getting their supply primarily from small cooperatives, who in turn get their supply from state-run Dharma Niaga, which has been charged with distributing cooking oil.
The Indonesian government wants to limit olein prices to 3,500 rupiah/kg in an effort to curtail soaring prices of basic commodities.
The small cooperatives, which are supposed to sell directly to the market, have been selling to the traders to make a quick profit.
Indonesian traders have been paying about 5,000 rupiah/kg for the olein and the prices are expected to go up as they see no quick resolution to the tight situation.
Prices from Jakarta are expected to go up above 6,000 rupiah/kg, they said.