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.