Malaysia palm oil futures sink

Malaysia palm oil futures sink

KUALA LUMPUR (Reuters): Malaysian palm oil futures gave back all of last week's gains on Monday as the market's failure to test higher levels prompted long liquidation, traders said.

"The market had looked toppish and when it failed to breach the 870 ringgit resistance, players started to liquidate their positions," said one trader in Kuala Lumpur.

The benchmark third-month January futures KPOF1 contract ended down 39 ringgit at 830 ringgit (US$218.42) a ton after trading as low as 827 ringgit.

Traders pegged immediate support at 820 ringgit.

The government's forecast of a 7.5 percent increase in 2001 output also brought to a halt the recent rise in prices following encouraging export figures.

The Finance Ministry said on Friday that Malaysia's palm oil production was expected to rise to 11.45 million tons next year from an estimated 10.65 million in 2000, mainly due to an expected 3.7 percent increase in the harvesting area.

Traders said the market also feared that a weakening rupiah currency would lead to aggressive export sales from Indonesia, the world's second largest palm oil producer after Malaysia.

At 1030 GMT, the rupiah was quoted at 9,380/9,420 to the U.S. dollar, around its lowest level in three months.

Dealers said the currency has been under pressure following growing tension between the U.S. and Indonesia and a recent outbreak of violence in the country.

Traders said export data for the whole of October due on Tuesday could provide some cheer to the market.

Cargo surveyor Societe Generale de Surveillance Malaysia Sdn Bhd (SGS) had estimated Malaysian palm oil exports for the first 25 days of October at 789,807 tons, compared with 659,749 tons for the same period in September.

Physical prices also weakened on renewed selling by producers and slow products business.

November (south) crude palm oil was offered at 815 ringgit a ton against bids of 805, and traded at 830 to 810.

Among refined products, November RBD palm oil was offered at $230 a ton FOB and December at $235.

There were offers for November RBD palm olein at $250 and December at $255.

November RBD palm stearin was offered at $180 and November palm fatty acid distillate at $137.50.