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.