Palm oil market awaits RI news
Palm oil market awaits RI news
KUALA LUMPUR (Reuters): Asian palm oil traders are largely
unsure about this week's trend with markets still clouded by
uncertainty over Indonesia's supply situation and prospects of
slower export business.
They said the markets were likely to focus on currency
movements.
"We feel that the trend is directionless in the immediate
term. The Indonesian issue is still not resolved," said a trader
in Malaysia. "Indonesia has to make a firm decision on the supply
situation quickly. If not, we are afraid that smuggling will get
worse as there is a short supply."
The Indonesian government, according to a media report last
week, was considering banning export of crude palm oil (CPO)
again due to tight supplies.
But State Minister for Food A.M. Saefuddin later told
reporters Indonesia would continue to export CPO with an export
tax.
He said Indonesia would import CPO if necessary to deal with
domestic scarcity of cooking oil.
Some Indonesian traders said that at least 300,000-500,000
tons of crude palm oil had been smuggled from smaller ports in
Sumatra from January to June this year.
Indonesian traders said prices of olein would not fall
significantly this week due to an increase in possible smuggling.
"I think prices will only fall as low as 5,700 rupiah/kg,"
said one Jakarta based trader.
The government's decision to increase taxes on the export of
crude palm oil (CPO) and its product from 40 percent to 60
percent does not ease the tight supply of domestic olein.
Indonesian traders expect exports to slow down following an
increase in export tax for CPO.
"Exports will slow down a bit this week but possible smuggling
is on the rise because it is more profitable for the exporters",
said the Indonesian trader, citing an end to smuggling as a key
to control the price.
"The impact from Indonesia's tax hikes is dying," one
Singaporean trader said.
Some traders in Singapore said that a firmer Indonesian rupiah
and no signs of Indonesia banning palm oil exports could slow
down market activity.
"Room for a bull market is limited," said a trader in
Singapore.
Malaysia's benchmark, third month October futures contract was
closed on Friday at 2,414 ringgit a ton.
In Jakarta, Indonesian palm olein prices fell slightly
yesterday as traders expected further falls this week due to
increased domestic supplies.
"Prices could fall as low as 5,700 rupiah by the end of this
week as so far we have been able to meet the local demand", said
one Medan-based trader.
However, other traders said olein prices would only remain
stable until the end of the week if Indonesian rupiah continued
to fall. The rupiah was trading at 13,850/14,075 to the dollar at
0930 GMT compared with 13,275/13,375 late last week.
Ex-factory olein prices in Jakarta and Medan were quoted at
5,759 rupiah/kg and 5,350 rupiah/kg respectively.