Asian palm oil price seen rising

Asian palm oil price seen rising

KUALA LUMPUR (Reuters): Asian palm oil prices will continue their upward trend this week with prospects of good export business due to palm's discount over other vegetable oils, with currency factors boosting sentiment, regional traders said.

"Palm is still looking firm," a senior trader in Singapore said. "The medium-term outlook is looking good."

Fundamentally, buying for palm oil is running at strong levels, dealers said.

"The buying is at a reasonable level, maybe a little lower than others had hoped. But the buying is still there," a dealer said. The pace of buying from traditional customers like India is good along with those from other buyers in Europe.

Malaysian traders expect more demand as palm prices are much cheaper than other vegetable oils and this could trigger more export business in coming months.

One dealer in Singapore said the availability of ships for November shipment remained tight.

"It's still a bit tight for November shipment," the dealer said. Traders were unable to provide more details on the scarcity of ships.

Dealers said the performance of palm oil on the Kuala Lumpur Commodity Exchange (KLCE) would continue to be dictated by the level of the ringgit against the U.S. dollar.

"When it comes to the KLCE, the movement of palm will be ringgit-based," a dealer said.

Malaysia's benchmark, January futures which closed on Friday at 1,709 ringgit a ton on the KLCE should be firmly supported above the 1,700 ringgit level.

The Malaysian ringgit fell to a low of 3.4520 to the dollar on Friday, which sparked off more speculative buying interest. But it recovered to settle at around 3.34 on Saturday morning.

Indonesian traders expected palm olein and oil prices to be stable while eyes were still on the currency.

"Again, the currency will be the main issue in the market this week," said a trader in Indonesia.

Indonesian traders said the market generally ignored the announcement of an agreement on Friday between the International Monetary Fund (IMF) and the Indonesian government on a program to restore confidence in the economy.

"The problem with the announcement is that it lacks details, such as figures. The rupiah did not see any significant change after the announcement either," said an Indonesian trader.

Indonesian crude palm oil was quoted at Rp 1,825 per kilogram in North Sumatra city of Medan, while palm olein held steady at Rp 2,020, traders added.