Asian palm oil market to stay uncertain this week
Asian palm oil market to stay uncertain this week
KUALA LUMPUR (Reuters): Asian palm oil prices are likely to be influenced by currency movements, prospects of fresh exports and developments in the countries of major buyers, regional traders said.
Technical factors alone could influence price movements in the absence of supply and demand, traders said.
Indonesian traders said prices of olein would fluctuate on a weaker rupiah against the U.S. dollar.
"Prices will fluctuate. It's hard to say whether olein prices will be stable and I am not sure about it at all," said one trader in Jakarta.
Traders complained it was hard to keep selling cheap olein because of the continuing weakness of the rupiah against the dollar. The Indonesian rupiah hovered at around 11,500 to the dollar on Friday.
Some Indonesian traders said it would be profitable to export crude palm oil (CPO) despite a 40 percent tax.
"I don't think the government's efforts to stabilize cooking oil will be successful. I don't think it is effective when the rupiah is soft," said another trader in Indonesia.
Indonesian palm olein was quoted at around Rp 3,500/kg in Jakarta. Offers were also heard at Rp 3,650-4,000.
The Indonesian government and producers agreed recently that olein prices should not be more than Rp 4,000 /kg by the time it reached consumers, meaning ex-factory olein should sell at Rp 3,500/kg.
This was aimed at stabilizing cooking oil prices, which soared after riots last month in Jakarta.
Market talk last week suggested traditional buyers like India and Iran might enter the palm oil market.
Rumors
"This kind of demand rumors could continue to underpin sentiment," said a trader in Kuala Lumpur. "Sentiment could be firm. The market is prone to any market-moving news or talk, and this could trigger trade and speculative buying."
"It's a positive factor for the market, but we have to see when they (the Indians) will announce the tender," said a Singapore-based trader.
India's State Trading Corporation (STC) is likely to issue fresh buying tenders soon while Iran may seek to buy 40,000 to 65,000 tonnes of July/August/September RBD palm oil.
Some traders said the palm oil prices were on the high side and further technical downward adjustments could be seen.
Malaysia's benchmark, third month August futures contract closed on Friday at 2,320 ringgit a ton. "We just can't predict the resistance or support levels as the market remains volatile," a Malaysian trader said.
The market is also closely watching developments in the main consumer countries of India and Pakistan after their nuclear tests, they said.