KL palm oil rises despite govt forecast

KL palm oil rises despite govt forecast

KUALA LUMPUR (Reuters): Some buying interest, aroused by overnight gains at the Chicago Board of Trade (CBOT), lifted Malaysian palm oil futures prices on Tuesday but players ignored the latest government forecast on palm oil output.

Primary Industries Minister Lim Keng Yaik said Malaysia had lowered its forecast for palm oil output in 2000 to 10.6 million tons from a previous estimate of 11 million tons due to a decline in yield. Output reached 10.5 million tons in 1999.

Traders disregarded the news, saying ample rains in the world's largest palm oil producer would boost yield in coming months.

"It's not going to affect the market. The new figures are only 500,000 tons less than the earlier forecast...so it's not important," said one trader in Kuala Lumpur.

"There is plenty of oils in the global market," he added.

The benchmark third-month November futures contract ended up four ringgit at 991 ringgit ($260.78) tons, after trading as low as 986 ringgit.

Volume was 845 lots against 1,012 at the close on Monday.

Traders said the market was awaiting August output, stock and export figures to be released by the Malaysian Palm Oil Board (MPBO) on Friday.

Fears of a production glut in 2000 have kept the palm oil futures market in the doldrums for most of this year. Malaysian palm oil prices have fallen to below 1,000 ringgit a ton compared with an average of 1,500 ringgit last year.

But Lim said a revised production forecast, the government's decision to allow seven companies to export crude palm oil duty- free this year and a credit scale plan would keep stocks in check and boost prices.

Sept (south) crude palm oil was offered at 950 ringgit a ton against bids of 945. Trade was reported at 945 to 950. Sept (central) was offered at 955 against bids of 950. Trade was reported at 945 to 950.

Oct (south) crude palm oil was offered at 980 ringgit a ton against bids of 975, and trade was reported at 975 for both south and central.

Among refined products, Sept RBD palm oil was offered at $267.50 a ton FOB, Oct at $270 and Nov/Dec at $277.50. There were offers for Sept RBD palm olein at $287.50, Oct at $290 and Nov/Dec at $297.50.

Sept/Oct RBD palm stearin was offered at $205 and Sept/Oct palm fatty acid distillate at $175.

In Jakarta, Indonesia's finance minister, Prijadi Praptosuhardjo, said Tuesday that he had signed a decree to cut the export tax on crude palm oil to 5 percent from the current 10 percent and olein products to 2 percent from the current 6 percent.

"These cuts are effective today," he told reporters. Crude palm oil exporters have been calling for a cut to the export tax to help profits amid declining world prices.

But conflicting statements Monday on the planned tax cut from Prijadi and Trade Minister Luhut Panjaitan had unnerved some traders.

Prijadi said the export tax on refined bleached and deodorized palm oil had been cut to 2 percent, from 6 percent.