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.