Palm oil prices expected to be mixed in SE Asia
Palm oil prices expected to be mixed in SE Asia
KUALA LUMPUR (Reuter): Southeast Asian palm and laurics oils are likely to be mixed this week, with higher supplies and weak demand seen affecting the palm markets in Singapore, Indonesia and Malaysia, regional traders said.
Philippines coconut oil prices are expected to stay at high levels as scarce supply continues to prop up the market, Filippino traders said.
"It's going to come off. The combination of supply improving and demand weakening will drag prices down," a trader in Singapore said. There was market talk that May palm oil output in Malaysia may rise by about 10-12 percent over April's production of 615,647 tons.
"Palm oil prices are going to drift lower with stocks going up," a trader in Singapore said. Malaysian traders said that end- May stocks are estimated to be above 700,000 tons, and stocks are likely to increase in coming months.
Prices are also a bit high so some decline is anticipated, traders in Singapore said, adding that an absence of export business of fresh tenders to give direction to the market will also weigh on prices.
Traders in Malaysia also added that there was no demand news from India's STC, Pakistan and Egypt tenders last week and the market hoped for some demand news this week. The market is awaiting for export data for May from two cargo surveyors, Caleb Brett and SGS (M) Sdn Bhd.
Third month, August futures which closed on Friday at 1,188 ringgit a ton are expected to trade in a range of 1,170 to 1,200 ringgit this week.
In Indonesia, palm olein prices, which have slid steadily since early May, still had some downside potential as they were at a premium to Malaysian values.
"I think prices will ease further this week," a trader in Indonesia said. "Supply seems to be ample in Jakarta while demand has been poor as buyers are waiting for prices to come down further."
"I estimate that olein prices will test the Rp 1,300/kg level this week," the Indonesia trader said. Indonesian palm olein finished last week at Rp 1,350-60 in Jakarta compared with Rp 1,385-90 a week ago.
Indonesian traders said high May export taxes for crude palm oil and its products had put a squeeze on exports, blunting exporters' competitiveness and causing more oil to flow into the market.
Philippines coconut oils are expected to stay at high levels, dealers said. "It's hard to buy copra and a few dealers have short positions so we'll still see firm prices," a dealer in the Philippines said. "In 1995, I was able to buy 33,000 tons of copra for the entire year while now, we're almost at mid-year and I haven't even reached 300 tons yet," another trader in the Philippines said.
Copra, the raw material used to make coconut oil, has been in short supply after a string of typhoons battered coconut-growing areas on Luzon island.
Trading in the Malaysian palm market is expected to be lower due to technical reasons as the charts are showing a downward trend, traders said.
"The market may pick up if there is some demand news come in," a dealer said, adding that he expects India's STC or Pakistan to issue fresh tenders this week.