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.