Palm market eyes RI unrest

Palm market eyes RI unrest

KUALA LUMPUR (Reuters): Asian palm oil markets are expected to
be cautious this week with the market focused on the unrest in
Indonesia, regional traders said.

Traders in Malaysia said currency movements and the trend in
European vegetable oil markets would dictate price direction.

"The market is going to be quiet. Everyone seems to be in a
wait-and-see position. We will see what's going to happen this
afternoon," said one trader.

The Indonesian market, paralyzed last week because of riots,
is expected to be quiet as Jakarta is assessing the damage caused
by the turmoil.

On Monday, hundreds of students moved on parliament to renew
their demands for President Soeharto to quit and for political
reform, while some 50,000 students gathered in Bandung, 120 km
east of Jakarta, to march on the provincial parliament.

The jittery currency market saw the rupiah sinking to
12,000/13,000 versus the dollar at 0437 GMT.

Indonesian palm olein was last sold in Jakarta on Wednesday at
4,000 rupiah/kg.

"We are still wary over the riots in Indonesia," said a senior
trader in Kuala Lumpur.

"Most people are taking a wait-and-see attitude. Sentiment is
very nervous now and I don't expect much to happen in coming
days," one trader in Singapore said.

"Everything depends on Indonesia. In Malaysia it's just a
currency game at this moment but in Indonesia there are so many
uncertainties. No-one can be sure what will happen next," said
another Singapore trader.

Traders in Malaysia are seen covering positions on speculation
of a further drop in the ringgit if the rupiah continued to fall.

Apart from the Indonesian unrest and a weak ringgit, higher
prices in Rotterdam could also underpin prices, traders said.

The benchmark, new third month August futures contract is
expected to test the record level of 2,530 ringgit a ton. It
closed on Friday at 2,500 ringgit.

But some traders said expectations of bearish fundamentals
could slow the rise. Rains could increase palm oil output in
coming months, they said.

The April crop figures released by the Palm Oil Registration
and Licensing Authority last week also cautioned players.