Asian palm oil markets at top end of range
Asian palm oil markets at top end of range
KUALA LUMPUR (Reuter): Asian palm oil markets are seen trading firm this week, though demand may begin to dry up as the price of Malaysia's benchmark July futures heads up towards closer to 1,300 ringgit a ton, regional traders said.
"It's at the top end of the range," a senior Singapore dealer for a U.S. commodity company said, adding July contract will likely inch up to around 1,295 a ringgit a ton.
Some traders in Kuala Lumpur said the July contract's support level is 1,280 ringgit. On Friday, the contract closed at 1,290 ringgit a ton.
"I think palm will remain firm this week due to strong interest from refiners in Malaysia," a Singapore dealer for a European trading house said.
Traders in Kuala Lumpur said there was shortcovering from refiners on expectation of tight supplies in the near term.
Malaysian physical prices were firmer in recent days with refiners seen covering their positions to meet earlier commitments.
Traders in Singapore said the firm tone of the market should continue, but the rise may eventually discourage buyers. "I think the prices are beginning to deter some buyers," a Singapore dealer said.
A Malaysia trader added: "If the market surges further this week, it will be more expensive for consumers to buy palm than other edible oil."
Malaysia's output is expected to rise in coming months as the peak production period is arriving, traders said. Palm normally peaks at October/November.
In Indonesia, prices will be steady with buying interest remaining modest.
"I think prices will be hovering around current levels this week," an Indonesian trader said. "There has not been much local support because of the ongoing general election campaign."
Players had generally been cautious, keeping stock levels low as a precaution against possible social unrest and damage to property during campaigning for the May 29 elections.
"There might be some sporadic buying as usual but prices are likely to remain stable," an Indonesian dealer said.
Indonesian palm olein finished last week at 1,450-55 rupiah/kg in Jakarta, up from 1,445-50 rupiah a week ago.