Southeast Asian palm oil markets seen mixed

Southeast Asian palm oil markets seen mixed

KUALA LUMPUR (Reuter): Southeast Asian palm oil markets are expected to trend firmer this week with prospects of export business aiding Singapore and Malaysian prices, regional traders said.

However, Indonesian oil is likely to trade lower on weak demand, although traders said the downside will be capped relatively by the high price of crude palm oil.

Singapore traders expect fresh inquiries by Chinese and Indonesian buyers looking for spot oil. Sentiment will be further buoyed if demand emerges in Pakistan and India.

A senior Singapore dealer for a U.S. commodity firm was more skeptical, saying active buying will be needed from China, Pakistan and India to keep prices well supported.

"I guess it's going to be dictated by the demand we see," the trader said, adding that the price of the KLCE's May contract should keep within a 20 ringgit range. "I don't think we'll drift away from where we are now."

"I think buying will continue on dips and should prop up prices," a Singapore trader for a European commodity house said. "It will not be wholesale, but it will be on a gradual basis."

Another dealer said: "There's a firm tone to the market and it should persist this week."

Malaysia's benchmark third position May futures contract on the Kuala Lumpur Commodity Exchange (KLCE) would have a floor this week of 1,250 ringgit a ton and a topside of up to 1,290 ringgit.

"It may even touch 1,300 ringgit," one trader said. May futures contract closed on Friday at 1,264 ringgit.

Malaysian traders said the market was overdone recently and prices should rebound on technical adjustment.

But any sharp rallies should be halted by the expectation of larger output in coming months as the low crop season ends and more fruits are harvested after the long festivals holidays, said traders.

Traders in Indonesia said crude palm oil supply was tight after the Moslem Eid al-Fitr holidays in early February, which saw harvesting ground to a halt.

"I think prices will stay at the current level, or decline slightly," an Indonesian trader said.

"The high price of crude palm oil will ensure olein prices do not go down too much," he added.

Indonesian palm olein ended the week at Rp 1,460-65 a kg in Jakarta against Rp 1,480-85 previously.

"Crude palm oil prices are high when compared with palm olein prices," an Indonesian trader said. "Buyers are looking to buy at Rp 1,280 while sellers are at Rp 1,300."

"Palm olein has to adjust higher to ensure there is some processing margin," the trader said.

Indonesian crude palm oil was generally stable at Rp 1,300 a kg, traders said.