Asian palm oil markets eye currencies, export data

Asian palm oil markets eye currencies, export data

KUALA LUMPUR (Reuters): Movements in regional currencies and Malaysia's export data are likely to determine the direction of Asian palm oil prices this week, traders said.

They said the wild swing in the Malaysian ringgit and Indonesian rupiah has triggered continued speculative interest in the markets.

"I don't know how the market is going to behave. There is currency fluctuation which pushes prices up, but on the other hand, there is also a need to stabilize prices to prevent social upheaval," said one trader in Jakarta.

"Currency movements remain a major factor in the palm market if there are no supply/demand factors," said a Malaysian trader, adding that palm oil prices could climb again if the ringgit fell back below the 4.00 a dollar support level.

The ringgit and rupiah dipped to 4.09 and 16,800 to the dollar respectively last week before settling at around 3.97 and 13,900 on Friday.

Malaysia's benchmark, third month September futures contract closed on Friday at 2,307 ringgit a ton.

Traders said currency volatility has made prediction of support and resistance levels difficult.

"Apart from currency, the market is waiting for Malaysian export figures to be released by cargo surveyor SGS this week," said a trader in Kuala Lumpur. "We are keen to know the export numbers as there was talk that exports for this month have picked up."

On Friday, private crop forecaster Ivan Wong said he expected exports to rise to 605,000 tons in June from 525,668 tons in May.

Wong forecast end-June stocks at 650,000 tons.

A Singapore dealer said prices should hold firm around these levels as exports are seen high this month.

Indonesian palm olein, which is used as cooking oil, finished the week at 4,900-5,100 rupiah/kg in Jakarta.

Indonesia's state-run Dharma Niaga trading company sold cheap olein at 3,800 rupiah/kg, in a move to stabilize cooking oil prices, local traders said.

They said the company would obtain olein from the state-run joint marketing agency (KPB), which markets crude palm oil produced in state plantations.

Traders said the move to sell cheap cooking oil had failed because of the continuing weakness of the rupiah.

Last week Indonesia, the world's second largest producer of crude palm oil, said it may have to import cooking oil from Malaysia if local prices continue to rise and stocks diminish.