Malaysia palm oil futures off highs due to profit-taking

Malaysia palm oil futures off highs due to profit-taking

KUALA LUMPUR (Reuters): Profit-taking hit Malaysia's palm oil
futures at the close on Friday after players concluded the
country's plan to cut stocks and raise prices will only benefit
rival vegetable oils producers.

"People took profit after learning the outlook is not as
bright as they have thought. Exports may be good in March, but we
don't know what will happen in April/May when soyoil starts
entering the market," said one trader in Kuala Lumpur.

Some traders expected Malaysia's palm oil exports to reach up
to one million tons in March because of declines in soybean oil
supply, which forced buyers to turn to palm oil.

Brazil is harvesting soybean while Argentine is expected to
start next month. Fresh soyoil supply from South America could
start to flood the global market in April/May/June and curb
Malaysia's exports, said traders.

Primary Industries Minister Lim Keng Yaik said the country's
largest power firm, Tenaga Nasional Bhd, had started burning
crude palm oil (CPO) in the last few days as part of a project to
ease stocks in the world's largest producer.

At the close, benchmark third-month June futures was unchanged
at 880 ringgit ($231.57) a ton after trading as high as 899
ringgit. Volume was 2,766 lots.

Traders said Indonesia, the world's number two producer of
palm oil, will offer discounts to grab market share, while Brazil
and Argentina, exporters of competing soybean oil, will target
the Indian market where import duties favor soybeanoil over palm
oil.

Traders said Indonesia had sold CPO at $207/ton FOB Belawan
for April shipments while Malaysia's crude palm oil was much
higher at $223/ton.

Physical April (south and central) was offered at 870 ringgit
a ton against bids of 860. Trade was reported at 865 to 870 for
both regions.

May (south and central) was offered at 880 ringgit and bid at
870, and trade was reported at 880 to 885 for both regions.