Asian palm oil prices seen firm

Asian palm oil prices seen firm

KUALA LUMPUR (Reuter): Asian palmoil and laurics prices will probably firm this week with tight supplies and fresh demand boosting sentiment, regional traders said yesterday.

The palm market in Indonesia will remain steady as players replenish stocks after a week-long holiday, they said.

Philippines' coconut oil will be steady to marginally softer as vegetable oil markets in the region emerge from the long Lunar New Year holidays looking for direction.

Indonesian palm traders said an apparent shortage of palm olein could help keep prices steady. "Some players seem to be short of ready olein in Jakarta," one said.

Traders in Singapore said tight supplies, due to the absence of workers during the holidays would support prices.

"The supply side is a bit thin. This may remain so for the next 10 to 15 days until the situation is sorted out," one dealer in Singapore said.

He said adverse weather and shorter working days in February due to festival holidays had aggravated the situation.

"February is short on harvest. Furthermore, many Indonesian and Malay plantations workers are taking a long holiday break," he added.

Some Kuala Lumpur traders reported hearing rumors that output in February had dipped by 20 percent. A few dealers believe production could drop by as much as 30 percent from January's 565,465 tons.

"It is possible that output in February could drop by this amount (30 percent) because it is a short month with many holidays," a Kuala Lumpur dealer said. "This has created tightness among nearby months."

Malaysian third month, May futures contract which closed on Monday at 1,262 ringgit a ton will see its next resistance at 1,300 ringgit with immediate support at 1,240 this week.

Traders in Malaysia said expectations of strong exports for this month would help sentiment.

SGS (M) Sdn Bhd said it will release its February 1-25 palmoil export data yesterday and February export data later this week.

Another cargo surveyor, Caleb Brett, will release its February export data on March 1.

One trader in Indonesia said he expected demand to be sustained this week with palm prices touching the 1,400-rupiah mark.

"I think the Rp 1,400 level is possible as demand is likely to continue being strong this week," the trader said. Palm olein was around Rp 1,365-70/kg in Jakarta, up from Rp 1,325-Rp1,3330 on Feb. 16. The Indonesian market was closed from Feb. 19-22 for the Idul Fitri celebrations.

Coconut oil prices would remain fundamentally supported by thin supplies of copra in the market, a Philippine trader said. "There may be a dip, but it won't be sharp," he said.

Coconut prices for nearby months reached $740 a ton CIF Europe last Friday, and will likely drift downwards by $10.

"It's been a quiet market because of the holidays last week. Prices may slightly soften if sellers come out to unload some copra. But there should be support for prices by the end of the week," a trader in a major company said.

Palm oil prices would also help provide direction for the market in coming days, dealers said.