Palm oil remains bearish in Asia

Palm oil remains bearish in Asia

KUALA LUMPUR (Reuters): Weak fundamentals curbed trade in Malaysia's crude palm oil futures on Wednesday, amid slow demand and rising output, but freight rates held unchanged on fear of disruption to shipments, industry sources said.

With U.S. President George W. Bush talking war after last week's attacks on New York and Washington, palm oil traders spoke of possible disruptions in shipments from Malaysia and Indonesia in the event of retaliatory attacks.

"There could be some disruptions if the U.S. launches an attack against Afghanistan. Freight rates are steady this week, but that's not because demand is coming back," said one freight broker in Kuala Lumpur.

All foreign aid organizations and diplomatic staff have evacuated Afghanistan ahead of possible U.S. strikes.

In Kuala Lumpur, brokers said freight rates from Peninsular Malaysia and Sumatra in Indonesia were steady at US$23-$24 a ton for the west coast of India. Rates to the east coast of India were stable at $18-$19 a ton.

Rates to India, the world's largest edible oil importer, and other main destinations such as China and Pakistan had weakened by $1 a ton last week due to sagging demand.

By midday on Wednesday, the benchmark third-month December contract was three ringgit higher at 929 ringgit ($244.47) a ton on technical rebound.

Some traders said buyers from Pakistan, which borders Afghanistan, had made inquiries this week due to rising tensions.

It normally buys around 108,000 tons of palm oil from Malaysia and Indonesia a month.