Traders predict lower palm oil prices
Traders predict lower palm oil prices
KUALA LUMPUR (Reuter): Southeast Asia palm and lauric oils may be mixed this week, with rising production, weak demand and bearish sentiment seen pulling down Malaysian, Singapore and Indonesian palm prices, regional traders said yesterday.
Philippine coconut oil prices are expected to hold at high levels, with intermittent corrections, as Philippine exports continue to drop due to tight copra supplies.
Indonesian traders said buyers were anticipating prices to weaken further and were holding off from taking new positions.
"I think prices will go down slightly because buyers stopped buying when prices rose just a little bit on Thursday," one trader in Indonesia said. "Players are also closely watching the Malaysian market for price direction in the absence of local factors," he said.
Indonesian palm olein declined for seven straight weeks in line with Malaysia markets. Poor domestic demand and ample supply also pressured prices.
"The premium local palm olein had over Malaysia's has been eroded significantly in the past few weeks," one trader in Jakarta said.
Indonesian palm olein ended last week at Rp 1,280-85/kg in Jakarta against Rp 1,280-90 the previous week.
Prices in Malaysia continued to dip further last week but traders in Kuala Lumpur were divided over the immediate outlook.
Some said prices would extend late Friday's technical rebound, but others expect further falls as underlying sentiment remained weak. They said rising production and slower demand could lead to a further build-up in domestic palm oil stocks.
Private crop forecaster Ivan Wong forecast end-June stock at 790,000 tons and a three percent rise in June output to 745,000 tons over May.
Singapore palm oil is seen softening further due to the absence of China in the market.
"It's going to move lower," said a Singaporean dealer in a European commodity house, adding the market would not be able to shake off the bearish factors pulling down prices.
"There's nothing right now to hold the price up," another trader in Singapore said.
Malaysia's benchmark third position crude palm oil futures, which closed at 1,104 ringgit a ton on Friday, is expected to trade in a 1,040-1,090 ringgit range.
Steady buying by India would not be enough to overcome bearish factors in the market, traders in Singapore said, adding that better weather over soy-growing areas in U.S. would put more pressure on prices of soft oils.
"I see palm oil moving to 1,000 ringgit in the next 25-30 days," the dealer in the European commodity house said.
Philippine coconut oil prices are expected to remain firm.
"Prices corrected on Thursday night but I expect them to climb," said one Manila trader. Other Manila traders said coconut oil was pegged at US$860-$870 per ton CIF Europe for nearby months last Thursday against $880 on Wednesday.
"We have a very strong market here as coconut oil is trading at a $90 premium per ton over import prices with minimal supply," said another trader.
Traders expect the tight copra supply in the Philippines, the world's major coconut oil exporter, to remain until August.
"Dealers and farmers say supply may ease in August with better nut harvests from areas devastated by a big typhoon last year," the trader said.
Traders expect Manila's coconut oil exports to drop to 52,000 tons this month from 128,000 tons a year ago.