Palm oil rallies in Europe, but traders stay cautious

Palm oil rallies in Europe, but traders stay cautious

LONDON (Reuter): Palm oil prices rallied yesterday morning on the European vegetable oil market following the news that Indonesia's joint marketing agency (KPB) had suspended exports of crude palm oil in October.

A KPB offical told Reuters in Jakarta that the suspension would enable it to meet a backlog of previous commitments.

European traders said there had been a knee-jerk reaction to the news, but it only confirmed talk that had been in the market for two to three weeks.

Most sellers withdrew following the news and when an offer could be found it was around US$15 above Tuesday's close.

However, by midday crude palm oil asking prices had settled back to around $5 to $10 up while refined palm oil was $5 to $7.50 higher.

"Only the paper shorts are likely to be worried about this news. The physical side should have no problems with almost 56,000 tons of palm oil in the Rotterdam tanks and a lot more already at sea heading this way," said a trader.'

In fairly active trading crude palm oil fetched $560 for Oct., $542.50 for Nov. and $540 a ton cif for Dec.

No business was reported for RBD oil but olein made $540 a ton for Oct and $530 a ton fob Malaysian ports for Nov/Dec.

Soft oils hardly reacted to the higher soy oil futures close in Chicago.

Dutch soy oil was 0.50 guilders up after Nov/Jan traded at $92.50 a 100 kilos fob ex-mill.

Tight supplies underpinned rape oil with sellers 1.25 to 1.50 guilders up in a so far tradeless market.

Lauric oils were quiet during the morning with coconut oil unchanged and palmkernel oil $5 higher.

In Kuala Lumpur, Malaysian palm oil prices rallied further in late afternoon trading on talk of unfavorable weather conditions in the U.S. Midwest soyoil growing areas.

"The market expects some frost in the soyoil growing areas in the U.S this week," a dealer said, adding that earlier sentiment was strongly boosted on news that Indonesia had suspended exports of crude palm oil in October.

Some profit-taking emerged towards the morning close as players became more cautious and reaped some earlier profits, traders said.

"The market turned cautious and quieter towards the morning close as players came out to take some profits," a trader said, adding that most players were concerned about the suspension of Indonesia crude palm oil exports.

"The restriction is only for October and we do not know what is the amount to be suspended. This will only be for a short term," the trader added. "So people decided to reap some profits in late morning trading."

But profit-taking was well-absorbed and more buying emerged in the afternoon session. "There were some spreads activities done against November to December in the afternoon," a dealer said.

By the close of day, December futures ended 22 ringgit higher at 1,158 ringgit ($462.92) a ton. The contract touched a high of 1,160 ringgit earlier and dealers said the next resistance level will 1,180 ringgit.

October futures, November futures and January futures also posted sharp gains, they said.

"The near-term trend also depends on the performance of the U.S. Chicago soyoil futures tonight," another dealer said.

Trading remained volatile with turnover on the futures market 2,097 against 3,107 lots on Tuesday.

The physical sector saw continued buying from refiners.

Trading was also active with October (south) crude palm oil offered at 1,185 ringgit a ton after trading from 1,175 to 1,180. October (south) was bid at 1,180.

Oct (central) was offered at 1,155 with bids at 1,145 after making earlier sales done at 1,140, 1,150 and 1,145. Oct. (north) saw offers at 1,137.50 and bids at 1,125.

Nov (south) crude palm oil was offered at 1,190 ringgit with bids at 1,180 after trading at 1,195 and 1,180.

Nov (central) saw offers at 1,170 and bids at 1,157.50 and Dec. (south) at 1,190 with bids at 1,180.

In the refined palm oil market, Oct. RBD palm oil was offered at $510 a ton FOB Malaysia and Nov./Dec. at $505. Nov./Dec. was traded at $497.50.

Oct. RBD palm olein saw offers at $542.50, Nov./Dec. at $535 and Jan./Feb./March at $537.50. October was traded at $540 and Nov./Dec. at $530.

Oct. RBD palm stearin was offered at $387.50, Nov./Dec. at $395 and Nov./Dec. palm fatty acid distillate saw sellers at $330.