Palm oil market jittery over RI plan to lift ban

Palm oil market jittery over RI plan to lift ban

KUALA LUMPUR (Reuters): Asian palm oil prices are likely to be mixed this week, with the market concerned over regional currency movements and uncertain about whether Indonesia would lift its export ban, traders said.

"I think prices will stay the same. The market is looking for fresh leads and is curious to know what's going to happen with the export ban policy," said an Indonesian trader.

But traders in Singapore said it was likely Indonesia might lift its export ban for selected palm oil products in April to ease its foreign exchange problems.

"The market is expecting it will lift the ban for palm kernel oil and palm stearin, but the ban for oleins and palm oil will stay," said a Singaporean trader.

But edible oils businessmen in Indonesia and traders said the ban needed to be lifted as scheduled in order to avoid cooking oil shortages.

Indonesia's Trade and Industry Ministry spokesman said the government was still considering lifting the ban, but no decision had been made.

Indonesia in December banned the export of crude palm oil and its by-products between January and March in a bid to boost supplies and reduce prices of cooking oil.

Traders said prices in Malaysia were expected to firm on hopes buyers of Indonesian palm oil would be forced to turn to Malaysia.

"If the ban continues, it will be good for Malaysia as more consumers would commit more orders and this will reduce our stocks level," said a senior trader in Malaysia.

Ivan Wong, a Malaysian private forecaster, estimated lower than expected stocks at the end of January.

End-January stocks were projected at 665,000 tons against Malaysia's Palm Oil Registration and Licensing Authority (PORLA) 962,490 tonnes at end-December. He said output in January was likely to have fallen by 18 percent to 512,000 tonnes from December.

The third month benchmark April crude palm oil futures contract closed on Friday at 2,145 ringgit a ton. "Palm is following fundamentals apart from currency now," said a trader.

Indonesian traders said palm olein prices finished the week at 4,100-4,200 rupiah/kg in Jakarta against last week's opening of 4,300-4,500 rupiah/kg.

"Prices are going down because it is a kind of hard to keep selling olein at the 4,300 rupiah level. Demand is very poor," said one trader in Indonesia.

Yesterday, the Indonesian traders sold palm olein at lower prices in late trading in an effort to attract buyers.

"The response to these cheaper prices is fairly good. We just hope other traders will follow suit, but of course it is not profitable to sell olein this way when palm oil is expensive," said one trader in Jakarta.

"We are willing to sell cheaply because of concerns that cooking oil is disappearing from the market," he said.

Traders said olein was being sold at 3,500-3,700 rupiah/kg in Jakarta against the opening of 4,000-4,100 rupiah/kg.