Asia palm oil prices mixed, RI supply up

Asia palm oil prices mixed, RI supply up

KUALA LUMPUR (Reuters): Palm oil markets in Asia are likely to be mixed this week with Indonesian prices expected to soften because of anticipation that the Bulog commodity regulator would release its stocks into the market to boost supply.

However, prospects of more export business and weak regional currencies could shore up prices in Malaysia and Singapore, traders said.

"Prices may fall to Rp 5,000/kg because of the improving supply. But they may increase again if the stocks are not enough to stabilize prices," said one trader in Jakarta.

"Players were on the sidelines on Friday, waiting for the development regarding Bulog's plan to boost supply."

The Bulog commodity regulator said last week it had bought 55,411 tons of palm olein from private and state-run companies through a tender.

It bought 38,000 tons of olein from state plantations and private companies two weeks ago, also through a tender. Stocks were expected to be released into the market yesterday.

Indonesian palm olein prices finished last week at Rp 5,200- 5,300/kg in Jakarta.

Some Malaysian traders said speculation of more Indian tenders to buy palm olein could shore up prices.

"I think India could buy more oil in coming weeks ahead of a Hindu festival towards end-year. I don't think harvest for some of its local oilseed for this year will come in time before the festival," said a Malaysian trader who expects the market to firm on the back of weak regional currencies.

India was reported to have bought a fairly substantial amount of August/September palm olein shipment in the last two weeks, and traders were optimistic that India would continue its offtake.

In Jakarta, Indonesian palm olein prices softened yesterday despite the tight supply and traders said news that the government would release cooking oil into the market had dampened market sentiment.

Traders said olein, which is used as cooking oil, started the week at Rp 5,000-5,100/kg in Jakarta. It was sold at Rp 5,200- 5,300/kg last Friday.

"Offer prices fell this morning simply because of anticipation that the market will be flooded by cooking oil," said one trader in Jakarta.

"Supply is still tight, but traders believe there is no use to keep selling olein at high prices because the market will see ample supply soon," the trader said.