Asian palm oil marts seen in trading range

Asian palm oil marts seen in trading range

KUALA LUMPUR (Reuter): Asian palm oil prices are likely to be range-bound with a downward bias this week, as uncertainty in the fundamental outlook and a lack of fresh leads weigh on the market, regional traders said.

The market is also waiting for news from the third annual Asia Pacific Vegetable Oil, Oilseeds and Meal Market conference in Kuala Lumpur on April 23 and 24, they said.

Indonesian traders said consumer demand is seen weak in the aftermath of the Moslem Eid al-Adha celebration on Friday.

"To the extent that production in Indonesia and Malaysia remains strong, it's hard to see prices moving up," a trader for a U.S. commodity company in Singapore said. "I think the PORLA report showed a very strong uptrend in production."

Last week, the Palm Oil Registration and Licensing Authority (PORLA) said Malaysia's output in March was up 35.71 percent to 683,196 tons. The market is expecting output to increase in coming months due to a seasonal uptrend.

Production normally peaks in October/November.

Traders in Malaysia were uncertain over the fundamental outlook and were concerned about the small end-March stocks of 689,633 tons released by PORLA last week.

"Due to all these uncertainties, we expect the market to drift in a tight range with prices having a tendency to move downwards," said one Malaysian trader.

Malaysia's third month July futures closed on Thursday at 1,262 ringgit a ton, and is expected to trade between 1,235 and 1,275 ringgit. The market was closed on Friday.

A trader in Singapore said it will be difficult for the July futures contract to break out of its 1,235-1,275 ringgit a ton range in the next few weeks.

Another dealer said that with palm oil output rising and the commodity still seen as more expensive than soy oil, "It's hard for palm to rally under these conditions."

"We seem to keep moving the range lower and lower. I'd say we'll be moving the range down to 1,220 to 1,250 ringgit soon," the trader added.

Buying from traditional consumers of palm oil will probably remain steady this week, but no large purchases are seen lifting the market out of its bearish rut, Singaporean dealers said.

In Indonesia, traders said demand will be weak after the Eid al-Adha celebrations.

"The outlook for this week is hazy...demand is expected to return to normal after Eid al-Adha," a trader said. "I don't think there will be any significant changes to prices next week...they should remain stable."