Asian palm oil markets eye Indonesian trading

Asian palm oil markets eye Indonesian trading

KUALA LUMPUR (Reuters): Asian palm oil traders are likely to watch Indonesian markets closely this week as trade fully resumes following weeks of political turmoil.

Demonstrations and riots came to an end in Indonesia after President Soeharto resigned on Thursday.

"For sure, the market will start to return to normal on Monday, but it is still too early to make predictions on how the market will behave...just wait and see," said one trader in Jakarta.

Traders in Medan, they key commodity trading city in North Sumatra, said they expected Chinese merchants to return to the city from Singapore, where they fled because of the riots in capital Jakarta and Medan.

The new Indonesian President, B.J. Habibie, named a 36-member "reform and development" cabinet on Friday.

Indonesian traders said they welcomed the appointment of Trade and Industry Minister Rahardi Ramelan, replacing Mohamad "Bob" Hasan, despite the fact they did not have any idea how the new minister would deal with palm oil issue.

Ramelan was previously State Minister of Research and Technology under Soeharto.

"We need somebody who knows the market and how it behaves. But in general, there is a sign of relief that Bob Hasan has been replaced," said one trader.

Traders in Kuala Lumpur were also adopting a wait-and-see attitude after the appointment of Ramelan.

"It's is still too early to say anything. We don't know that guy. So it has to take a while to see whether he will make any changes to improve palm oil dealing," said a senior palm oil trader in Kuala Lumpur.

Traders added they are closely watching developments in the Indonesian palm oil market and currency movements.

Indonesian crude palm oil (CPO) was tendered at 3,295 rupiah/kg on Friday, and palm olein varied from 3,850-4,400 rupiah/kg.

The Indonesian rupiah was quoted at around 10,500/11,000 to the dollar in late Friday trading.

"We are watching what is going to happen next in the Indonesian palm industry after the appointment of the new trade and industry minister," another Malaysian trader said.

The Malaysian market is also waiting for May 1-25 palm oil exports data due on Monday.

Traders said that although the market tone remains firm, a rising domestic output could limit gains.

Malaysia's benchmark, third month, August futures contract closed on Friday at 2,423 ringgit a tonne.