Asian palm oil price seen firm on RI ban

Asian palm oil price seen firm on RI ban

KUALA LUMPUR (Reuters): Asian palm oil markets are expected to be kept firm by trade and speculative buying this week after Indonesia announced its ban on palm oil exports would continue, traders said.

They said expectation of higher overseas sales could mean bullish prices in Malaysia, and Singapore, which also trades in Malaysian palm oil.

In Indonesia, domestic prices are forecast to remain stable as the export ban meant a steady supply of main palm oil products to the local market, traders said.

Indonesia's Trade and Industry Minister Tunky Ariwibowo announced on Friday a continuation of the export ban, enforced since December, on crude palm oil, refined bleached deodorized palm oil, crude olein and refined bleached deodorized olein.

Export of stearin and palm kernel oil, also previously banned, was allowed from last week.

Sentiment in Malaysia was expected to be "very bullish" this week with the Indonesian ban staying, said a vegetable oil dealer in Singapore on Friday.

"And it doesn't look like the ban will be lifted any time soon," said the dealer.

Traders said the market in Malaysia was also fundamentally strong.

They said players in Malaysia were awaiting the release of February export data, scheduled to come from cargo surveyors Caleb Brett and SGS (M) Sdn Bhd on Monday.

They said the export figures could provide a further lead for the market, already propped up in the past half-year by a weak ringgit against the U.S. dollar.

Shrinking world vegetable oil stocks and a drawdown in Malaysian palm oil stocks has also fueled a bull run in Kuala Lumpur's palm oil prices in recent weeks.

Private crop forecaster Ivan Wong last week estimated end- February stocks of palm oil in Malaysia at 655,000 tons and end- March at 570,000 tons.

On Friday, Malaysia's third month, May futures contract closed at 2,117 ringgit a ton. Trading limit for the contract on Monday will be 100 ringgit, either way.

Traders said heavy trading for nearby shipments and demand for some forward positions could be seen in the current week. In Indonesia, the pace was expected to be slower.

"The market has cooled down because of the (export ban) news," said a trader in Indonesia. "We hope that prices will stay the same this week."

Palm olein was sold in Jakarta at 2,850 rupiah/kg on Friday.

Traders said the market was stirred on Wednesday when Agriculture Minister Syarifudin Baharsyah said the ban on palm oil exports would be lifted in two or three weeks.

But Trade and Industry Minister Tunky's clarification on Friday dampened the euphoria.

"Demand returned to normal after the (initial) rush (to buy)," said a trader.