KL palm oil up, RI a concern

KL palm oil up, RI a concern

KUALA LUMPUR (Reuters): Malaysian palm oil prices rebounded on short-covering to end slightly higher on Thursday.

Concern over Indonesian crude palm oil contamination held prices in a tight range as players awaited further developments, traders said. "Some covering was seen at the lower levels. But people are concerned over Indonesian palm oil," said a trader.

Industry sources said on Thursday Indonesia had delayed the export of 30,000 metric tons of crude palm oil from Belawan as it intensified its probe on shipments of diesel-tainted oil to Europe.

"We've delayed shipments to take all precautions...to make sure the upcoming shipments will be absolutely free of contamination," Derom Bangun, chairman of the Association of the Indonesian Palm Oil Producers (Gapki), said.

Earlier three cargoes from Belawan were found to be contaminated on arrival in Rotterdam since Oct. 4, and Dutch authorities have threatened to file a complaint with Jakarta.

Malaysia's palm oil exports to Europe are expected to increase if European buyers continue to have doubts over Indonesian oil.

European traders said buyers were washing out contracts, or selling back the shipment to Indonesian sellers, for the next two or three weeks to give the market breathing space.

There was talk of washouts of Indonesian contracts and the market believed that European traders were seen buying Malaysian palm oil for immediate requirements.

Traders said falls in Chicago soyoil futures overnight and lack of fresh news about demand from China and India sparked initial selling in a thin market.

But late covering pushed third month January futures contract up two ringgit at 1,178 ringgit (US$310.00) a ton by the close.