Asian palm oil prices may rise

Asian palm oil prices may rise

KUALA LUMPUR (Reuter): Southeast Asian palm oil prices may firm slightly this week on prospects of strong demand from traditional buyers and expectation of lower output, regional traders said.

"Exports look good while the increase in July production was not as big as anticipated. (Third month October) should test resistance at 1,120 ringgit a ton and then maybe move onto 1,150 ringgit," said one Singapore trader in a local commodity house.

Two Malaysian cargo surveyors, Caleb Brett and SGS (M) Sdn Bhd, said palm oil exports in July were estimated at 667,802 and 649,331 tons.

Malaysia's Palm Oil Registration and Licensing Authority said exports in June were 569,727 tons.

October futures contract closed on Friday at 1,085 ringgit a ton. One Singapore dealer said October palm oil should fluctuate between 1,085 to 1,150 ringgit a ton, with the commodity well supported at 1,050.

But another dealer said any increase may be capped in the absence of higher demand from major buyers like China.

"I'd say the price will probably trend sideways. It should range within 10-15 ringgit either way," said the Singapore dealer.

Palm olein prices in Indonesia are expected to be steady on good demand but ample supply could cap the upside. Buyers who stayed out of the market following the riots in Jakarta last weekend (July 27-28) were expected to resume purchases, Indonesian traders said.

"Many of the out-of-town buyers were quiet through the week following the problems," one said. "I expect them to return to the market this week as things have normalized."

Riots began after police took control of the Indonesia Democratic Party headquarters in the capital from supporters of Megawati Sukarnoputri, who was ousted as party leader by a breakway faction backed by the government.

Indonesian traders said sharply lower August export taxes on crude palm oil and products such as palm olein were unlikely to have any significant, short-term impact on domestic prices.

Indonesian palm olein finished last week at 1,320-25 rupiah/kg, unchanged from a week ago.