SE Asian palm oil prices rangebound, except RI's

SE Asian palm oil prices rangebound, except RI's

By Tan Lee Lee

KUALA LUMPUR (Reuter): Southeast Asian palm oil prices are expected to be rangebound this week except for the Indonesian market, which could dip slightly on the back of poor demand, regional traders said.

"This week's trend is likely to be rangebound unless strong offtakes from consumers and supportive factors emerge to reverse sentiment," a trader in Kuala Lumpur said.

Malaysia's benchmark September futures has found technical support at 1,190 ringgit, but a strong upper resistance at 1,200 will keep the contract rangebound between 1,180 and 1,200 ringgit, dealers predicted.

"The range is 1,180 to 1,200 for now and I don't think it will break and stand above the 1,200 level," said a Singapore-based trader.

On Friday, the September contract closed at 1,190 ringgit.

Traders in Singapore said the contract could be kept under the 1,200 ringgit-level by a combination of factors, including bearish soyoil futures in Chicago, higher domestic production of palm oil and an overall slowdown in buying interest.

"As long as the contract is trading below the psychological level of 1,200, we feel that the underlying tone is bearish as the chart still shows a sell-signal," a technical analyst said.

Forecasts that palm oil stocks were rising, alongside with production in Malaysia, has also undermined sentiment despite a pickup in Chinese buying this month.

"China is buying, but the rest of the world isn't," a trader in Singapore said. "There wasn't enough support for it."

Cargo surveyor Societe Generale de Surveillance (SGS) on Friday pegged China's palm oil imports from Malaysia from June 1- 20 at 94,300 tons against 43,100 tons for May 1-20.

In Indonesia, traders were bracing for a soft trading week.

"I was expecting the market to rebound this week, but with the falls in Malaysia on Friday I don't think it will happen," a trader in Singapore said. "But there will not be any significant fall."

Traders said processing margins were tight, and would underpin prices from falling significantly.

"Some players have been putting pressure on prices by selling at below the market range," another trader said. "But I think they are running out of steam."

Indonesian palm olein closed last week at 1,370-75 rupiah/kg, against the 1,385-90 rupiah/kg a week ago.