Asian palm oil prices seen mixed on Indonesia ban
Asian palm oil prices seen mixed on Indonesia ban
KUALA LUMPUR (Reuters): The Asian palm oil market is likely to
be mixed this week, with Indonesian prices expected to fall as
supply rises due to an export ban, regional traders said.
"Supply is beginning to improve because of the export ban, and
this will keep prices under pressure," an Indonesian trader said.
"But the decline will not be as sharp as last week's.
Indonesia last month banned the export of crude palm oil and
palm olein between January and March, and followed it up with a
ban on all crude palm oil products in a bid to boost domestic
production and reduce the price of cooking oil, traders said.
The government announced on Thursday that the ban would be
retained until March, after which palm oil exports would be
subject to an export tax not exceeding 20 percent.
"With the government confirmation that the export ban will not
be lifted until the end of March, we will see all production
entering the local market," the Indonesian trader said. "I see
the possibility of olein prices edging below the 2,000-rupiah
level this week," the trader said.
Indonesian palm olein was quoted at 2,300 rupiah/kg in
Jakarta, down from 3,400-3,600 rupiah a week ago.
However, regional traders said Indonesia's resolve to ban
exports of palm oil products until end-March could fuel rallies
on Malaysian and Singapore markets.
"I think the market looks very strong," one vegetable oil
dealer in Singapore said, adding the ban by Indonesia will help
keep prices on the positive side.
The Malaysian palm market also welcomed the Indonesian palm
oil export ban news.
"This news is good for us. With the export ban in Indonesia,
buyers will have to turn to us (Malaysia) for palm products,"
said a senior trader in Kuala Lumpur.
"This will help to draw down our stock level."
Last week, Malaysia's Palm Oil Registration and Licensing
Authority (PORLA) announced a 15.17 percent fall in December
stock to 962,490 tons from November's 1.13 million tons.
But several Malaysian traders said last week's technical
correction to the recent bull-run will continue into this week in
anticipation of a strong ringgit.
The ringgit hovered at around 4.2 to the U.S. dollar on Friday
in Kuala Lumpur trading. It is likely to touch the 4.0 dollar
level this week, commodity traders in Kuala Lumpur said.
"The palm market is so sensitive to currency movements. Any
significant move in the dollar/ringgit will prompt speculators to
take advantage of the ringgit to hedge," said the Malaysian
trader. "People will just shrug off any fundamentals."