Liquidation persists in Malaysia palm oil futures

Liquidation persists in Malaysia palm oil futures

KUALA LUMPUR (Reuters): Malaysia's palm oil futures closed mostly lower on Tuesday as liquidation persisted on fears over a build-up in stocks and the absence of fresh fundamentals.

"This liquidation is partly contributed to COMMEX's announcement to increase the margin money to 2,200 ringgit for spot (January) and 2,000 ringgit for forward month," said one trader in Kuala Lumpur.

The previous margin money -- the fund taken by the Commodity and Monetary Exchange of Malaysia (COMMEX) to safeguard the interest of investors against price fluctuations -- stood at 1,000 ringgit for forward month and 1,200 ringgit for spot.

The new third-month March futures contract ended down 15 ringgit at 780 ringgit ($205.26) a ton. Volume was 1,938 lots.

Traders reported talk that India, one of Malaysia's main buyers of palm oil, planned to further increase import duty on palm oil.

But just after the market closed, India's Agriculture Minister Nitish Kumar said the Indian government was assessing the impact of the recent increase in import duties on edible oils and would not hesitate to raise them further if necessary.

Traders in Malaysia said the market showed little response to news that the government would let seven plantation companies export one million tons of crude palm oil without duty in 2001.

Primary Industries Minister Lim Keng Yaik was quoted by the national Bernama news agency as saying the oil would come from the East Malaysia states of Sabah and Sarawak on Borneo island.

The sale was expected to ease stocks and lift prices, Lim said.

Bernama quoted Lim as saying the finance minister was to give final approval of the plan.

Physical prices also weakened in light trade in the absence of buyers.

December (south) crude palm oil was offered at 720 ringgit a ton against bids at 715 and trade at 705 to 715.

December (central) was offered at 720 against bids of 715 and trade at 715 to 720.

January (south) crude palm oil was offered at 730 ringgit against bids of 725 and trade at 720 to 725. January (central) crude palm oil was offered at 730 against bids of 725 and trade at 725.

Among refined products, January RBD palm oil was offered at $207.50 a ton FOB and February at $215.

There were offers for December/January RBD olein at 217.50 and February at $225.

December RBD palm stearin was offered at $192.50 and January palm fatty acid distillate at $167.50.