SE Asia's palm oil prices seen mixed

SE Asia's palm oil prices seen mixed

KUALA LUMPUR (Reuter): The Malaysian palm oil market is seen steady this week while Indonesian prices are expected to remain soft, regional traders said.

They said bullish Malaysian exports data for March could help prices early in the week.

Cargo surveyors, SGS (M) Sdn Bhd and Caleb Brett are due to release March palm oil export figures yesterday.

"People are optimistic of a bullish March export data," said a trader in Kuala Lumpur.

Vegetable oil dealers said some support may gradually emerge from traditional buyers.

"I'm seeing some steadiness in the market. You're beginning to see some support at the low numbers," the general manager of a vegetable oil company in Singapore said.

Demand has been steady, but not spectacular, traders said. "I think Chinese offtake is reasonable," a trader said, adding that demand from Europe, Pakistan and India has been "fairly steady."

Some traders, however, said gains could be limited as the fundamental outlook remains uncertain with production in coming months seen rising.

Malaysian private crop forecaster Ivan Wong had estimated Malaysia's palm oil output in March to rise by 25 percent to 630,000 tons after a fall of 13 percent in February.

Malaysia's benchmark third month June futures closed on Friday at 1,245 ringgit a ton. Malaysian traders expect the contract to trade between 1,240 and 1,265 ringgit this week.

Most of the trade discounted speculation by some market players the June contract will approach the floor of 1,200 ringgit a ton. "I'd be surprised to see it at 1,200 ringgit," one senior trader said.

Indonesian palm olein prices are likely to remain soft on sustained weak demand, traders said.

"I think prices will remain stable or maybe weaken a little," one trader said. "Demand has been weak, while export prices have been declining."

He said there was no refining margin at current palm olein prices, adding that refiners would be making losses if palm olein values continued to decline.

Another trader said there was still some downside left in palm olein prices, adding that demand had been weak since the Moslem Eid al-Fitr celebrations in early February.

"If demand continues to remain poor, there's a possibility olein prices will weaken further," he said.

Palm olein finished the week at Rp 1,390-1,395 (US$0.58) a kg in Jakarta, unchanged from a week earlier after four straight weeks of decline.