SE Asian palm oil markets bullish

SE Asian palm oil markets bullish

KUALA LUMPUR (Reuter): South East Asian palm oil markets
should maintain a bullish trend in the coming week, supported by
good export prospects and upbeat currency and technical factors,
regional traders said yesterday.

"It's up, up and up. We're seeing a lot of buying right now
and this should continue this week," a European dealer said.

"Technically, the market is looking bullish. On fundamentals,
we are seeing good offtake everywhere from the Europeans to the
Indians and the Chinese," said a senior dealer.

Palm oil futures prices hit limit-up of 50 ringgit a ton on
the Kuala Lumpur Commodity Exchange on Friday, with benchmark
third month December futures closing the week at 1,434 ringgit a
ton.

Singapore traders said that a squeeze in spot October futures
due to a tightness in the availability of freight to ship palm
oil supplies could also aid sentiment.

"We may see a bit of a squeeze in October," said a Singapore
trader.

An Indonesian trader said: "We are quite happy with the
present trend and expect market sentiment to remain bullish this
week. In addition, the tight supply is also a factor boosting the
domestic market."

"In general, supply is tight because of the decline in the
output of palm oil in the wake of the drought."

Indonesian palm olein was stable at 1,700-10 rupiah/kg last
week in Jakarta while crude palm oil was quoted at 1,460
rupiah/kg in north Sumatran city of Medan.

Traders said weak regional currencies against the U.S. dollar
has been the main boost to the market.

"It's much cheaper to buy palm oil if the ringgit softens
further and would be an advantage for our exports," a trader in
Kuala Lumpur said. The ringgit hit an all-time low of 3.0710 to
the dollar on Monday morning.

Palm oil markets are also awaiting fresh fundamentals
including Malaysian palm oil exports for September 1-20 and
September output/export/stock estimates from crop forecaster Ivan
Wong, both due on Monday.

Singapore dealers said a drought spawned by the El Nino
weather pattern is beginning to hit palm oil farms in Indonesia,
but the effect in the market will not be seen until possibly late
1998.

"The effect should kick in probably late next year. There's
normally an 18-month lag time before this kind of thing affects
the market," a dealer said.