SE Asian palm oil prices likely to fall

SE Asian palm oil prices likely to fall

KUALA LUMPUR (Reuter): Southeast Asian palm oil prices are
expected to fall this week on continued selling pressure and lack
of export demand, regional traders said.

But coconut oil prices would hold steady to firm on the back
of thin supplies, they said.

Indonesian traders said market talk that state plantations
were going to cut crude palm oil prices to around 1,220-1,230
rupiah (53-53.4 U.S. cents) a kg would put pressure on values.

"Demand is usually thin two weeks before the start of the
Moslem fasting month (in later January)," a trader said.

The anticipated fall in local palm oil prices was delayed by
higher Chicago soyoil futures prices, prompted by concerns about
the weather in South American soybean growing areas.

Private crop forecaster Ivan Wong on Friday estimated
Malaysia's palm oil stocks at end-December at 835,000 tons
against 798,399 tons the month before.

He pegged exports in December at 485,000 tons, down from
541,057 tons in November.

Malaysian crude palm oil futures, basis third position, closed
on Friday at 1,299 ringgit a tine, down from 1,354 ringgit the
previous week.

Traders said the contract could be heading for 1,250 ringgit,
now that the 1,300 support level had been broken.

Singapore traders said the market had also been supported by
plantation houses.

"But at these levels, refiners could not possibly refine the
oil at a margin. Many experienced a negative 10-15 ringgit a
ton margin. Refiners could have easily sold the oil if not for
the high crude prices," a trader said.

Traders said at the same time, soft oils had been cheap in the
past couple of months compared with palm oil, causing the latter
to lose some market share.

Good domestic edible oil crops and lower local prices in India
and Pakistan also hindered palm oil imports.

"What the plantation houses didn't see is consumption is being
affected. The market is held up for different reasons.
Fundamentals were being ignored and nearby (palm) oil was being
built up," said a trader.

Coconut oil prices slid to as low as US$702.50 a ton CIF
Europe last week from around $715 the previous week, after Samar
Coconut Products unwound long positions and unloaded some 2,000-
2,500 tons on to the market.

"But the price right now looks like the floor and it should
firm up in the coming weeks," said a dealer in Manila.

Seasonally lean supplies in the first three months of the year
and extensive damage inflicted by a string of late-season
typhoons last year will make it difficult to replace supplies,
the dealer said.

Traders estimate that January shipments of coconut oil to
Rotterdam may only reach about 75,000 tons, compared with the
normal 100,000 tons.