Slow sales, doubt weigh on KL palm oil

Slow sales, doubt weigh on KL palm oil

KUALA LUMPUR (Reuters): Heavy liquidation persisted on the Malaysian palm oil market on Thursday, reflecting renewed worries about export prospects for the coming months and uncertainties over Chinese import quotas.

"Negative sentiment doesn't want to leave the market. We don't know yet if China will only buy oil from Malaysia. Everyone agrees that this month's exports will be lower than last month," said one trader in Kuala Lumpur.

"We are also not sure if the government will make any announcement on the duty-free concession next week. If there's no announcement by Monday, we will see more liquidation," he added.

Cargo surveyors Intertech Testing Services (ITS) and Societe Generale de Surveillance Malaysia Sdn Bhd (SGS) will issue their August 1-15 export figures on Friday.

The benchmark third position November futures contract ended down 17 ringgit at 1,000 ringgit (US$263.15) a ton, after trading as high as 1,019 ringgit.

Volume was 2,130 lots against 1,940 on Wednesday.

Traders in China said the country had issued new quotas for the import of about 600,000 ton of palm oil this year. The quotas were the second batch of the year.

Malaysian traders said the quotas would be valid for the months of September through March, which meant the amount of oil China would buy each month would be too small to lift the market.

It was also unclear whether China would buy the oil only from Malaysia. Traders said Indonesia has been selling palm oil cheaply, which was likely to attract the Chinese.

Primary Industries Minister Lim Keng Yaik said on Wednesday the government had not decided yet on the list of companies that would be allowed to export crude palm oil duty-free this year.

Yaik said the government could make a decision next week, but traders said it was unlikely Malaysia would make any decision until Indonesia decided whether it would cut or abolish export taxes on crude palm oil and its by-products.

Traders expected the government to allow the export of 500,000 ton of CPO duty-free from September to December this year.

Physical Aug (south) crude palm oil was offered at 955 ringgit a ton against bids of 950. It traded at 950.

Aug (central) crude palm oil was offered at 947.50 ringgit a ton against bids of 942.50, and traded at 945.

Sep (south) was offered at 970 ringgit against bids of 965. Trade was reported at 970. Sep (central) was offered at 965 against bids of to 960. It was traded from 942.50 to 950.

Among refined products, Sep RBD palm oil was offered at $272.50 a ton FOB, Oct at $277 and Nov/Dec at $282.50.

There were offers for Sep RBD palm olein at $290, Oct at $295 and Nov/Dec at $302.50

Sep RBD palm stearin was offered at $212.50 and Sep palm fatty acid distillate at $180.