Southeast Asian palm oil prices seen as uncertain
Southeast Asian palm oil prices seen as uncertain
KUALA LUMPUR (Reuters): Southeast Asian palm oil prices are
seen heading into an uncertain week, with the trend in Malaysia
and Singapore to be dominated by the direction of their
currencies, traders said.
"We're just looking at the ringgit. That's all you have to
look at in palm at the moment," a Singapore dealer for a U.S.
commodity house said. "It's all been ringgit-based."
"KLCE-wise, it's all currency-based," he said.
The ringgit fell to a new low of 3.4330 to the dollar on
Friday morning before recovering to 3.3875 at the close.
Traders said further weakness in the ringgit will push palm
oil on the Kuala Lumpur Commodity Exchange (KLCE) higher and
eventually mount a challenge to a major resistance at 1,700
ringgit a ton.
"Currency is still driving palm oil crazy," a senior Malaysian
trader said.
"It's amazing that palm oil is still following the ringgit's
trend. People are too speculative and they are just taking
advantage of the ringgit's fall," he added.
Demand for vegetable oils remains robust although buying by
China and India has slowed down slightly.
A Singapore-based trader said, "refined oil sales to China and
India are a bit slow", although volume from other buyers appeared
to be "picking up."
Dealers said buyers may start switching to palm soon because
it is at a big discount to soyoil.
Malaysian Refined Bleached Deodorized (RBD) was seen at a
US$65-$100 discount to soyoils.
"I have a feeling they'll start switching to palm soon," a
dealer said. "Right now, palm is the cheapest oil in the world."
Malaysia's benchmark, January futures closed 1,682 ringgit a
ton on Friday, is expected to move according to currencies'
movements, traders said.
However, Indonesian palm olein is expected to weaken amid
continued intervention selling by state commodities regulator
Bulog in a bid to cool prices, traders said.
"The market is expected to be weaker this week because of
Bulog's market operations," an Indonesian trader said. "There is
a possibility that prices will breach the Rp 2,000 level."
Bulog began its market operations on Wednesday following a
sharp rise in domestic palm olein prices in the wake of the
rupiah's plunge against the U.S. dollar since July.
"But the longer-term effectiveness of the campaign would
depend on how much olein Bulog is going to use in its market
operations," the Indonesian trader added.
Indonesian palm olein finished the week at Rp 2,030/kg in
Jakarta, against Rp 2,070-2,080 a week ago.