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.