SE Asian palm oil markets seen weak

SE Asian palm oil markets seen weak

KUALA LUMPUR (Reuter): Southeast Asian palm oil markets are likely be weak this week, with bearish February supply/demand figures released at the weekend seen having a negative impact on the Malaysian market.

Regional traders said Indonesian palm olein prices were expected to weaken for the fourth straight week on falling demand.

The Singapore market will be looking for fresh leads, with buyers emerging if prices slide by 30-40 ringgit from the levels prevailing on Friday, they said.

"PORLA's end-March stocks were much higher than expected and moreover exports were also down," a Malaysian trader said, referring to data released on Saturday by the Palm Oil Licensing and Registration Authority.

He said he expected a sell-off on Monday and Malaysian prices are expected to open about 10 ringgit lower.

Malaysia's PORLA said end-February stocks stood at 722,993 tons against private forecaster Ivan Wong's estimates of 675,000 tons and trade expectations of 670,000-690,000.

Exports in February were at 376,885 tons against trade estimates of 440,000-460,000 tons.

"Fundamentally, the market is still bearish and could lead to some technical selling this week," one chartist in Malaysia said.

"PORLA's numbers were basically not good and we expect the May futures contract to test 1,240 and then fall to the immediate support level of 1,230," he said.

Malaysia's benchmark May futures contract closed on Friday at 1,250 ringgit a ton. Chartists pegged key support at 1,200.

"If we lose 30-40 ringgit on the price of palm oil, we'll get some buying," a dealer for a U.S. commodity house in Singapore said.

Some light buying from traditional buyers India, Pakistan and China may appear at the lower levels, traders said.

Indonesia's palm olein market will continue to lack buyers, traders said.

"Buying interest is expected to remain poor this week, as buyers are anticipating prices to decline further," an Indonesian trader said. "The market talk is that prices will touch the 1,400-rupiah level this week."

Indonesian traders said a higher export tax on crude palm oil in March could affect exports, with more oil being channelled into the local market and depressing prices.

The government announced last week the export tax on crude palm oil had been raised to $52.52 per ton in March from $47.84 in February.

The tax is based on a composite average of international prices and is aimed at ensuring sufficient supply and stable prices in the domestic market.

Indonesian palm olein closed last week at 1,415-20 rupiah/kg in Jakarta, against 1,450-55 a week ago.