Palm oil futures may fall ahead of holidays

Palm oil futures may fall ahead of holidays

Bloomberg/Jakarta

Palm oil futures in Malaysia, the world's biggest exporter of
the edible oil, may fall for a fifth week ahead of year-end
holidays as buying orders slow.

Four out of five traders, analysts and producers polled in
Kuala Lumpur and Jakarta on Friday and Saturday said they plan to
sell palm oil, while one recommended holding the commodity.

"People have already bought what they need," said Boyke
Setiawan, a marketing analyst at state-owned PT Perkebunan
Nusantara VII, which owns oil palm plantations and processing
plants in Indonesia. "It's a seasonal event. The market will be
quiet until early January."

Palm oil futures on the Malaysian Derivatives Exchange last
week fell 1.4 percent to 1,385 ringgit (US$364) a metric ton. The
futures have fallen 21.9 percent this year on bigger stockpiles
as harvests increased in Indonesia and Malaysia.

People who still hold speculative long positions, or bets
prices will rise, are getting ready to cover their positions by
selling the contract back this week, a trader in Kuala Lumpur
said.

Malaysia and Indonesia produce about 80 percent of the world's
palm oil. Palm oil, used to make cooking oil and chemicals used
in soaps and detergents, is soybean oil's biggest rival in the
vegetable oil market.

Palm oil stockpiles in Malaysia rose to 1.41 million tons in
November, the highest since February 2001, according to the
Malaysian Palm Oil Board, a government agency.

PT Astra Agro Lestari, Indonesia's largest publicly traded
agricultural company, said output of the edible oil rose 25
percent to 698,819 tons in the first 11 months of this year.
Indonesia doesn't provide stockpile data.