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Asia Palm: Chicago rules Malaysia, new leads sought

KUALA LUMPUR: Malaysia's palm oil market looks set to take its cue from Chicago this week while Indonesia's will track fluctuations in the rupiah currency, traders said on Monday.

Chicago Board of Trade (CBOT) soya products closed mostly higher on Friday, lifted by a technical rally in soyabeans and talk of Chinese purchases.

"The market will follow what happens in Chicago. Actually our own fundamentals remain uncertain. But I think it may try the 1,200 level again," said a trader in Kuala Lumpur.

The third position June futures KPOMO contract ended down 10 ringgit at 1,195 ringgit ($314.47) a tonne on Friday after trading between 1,185 and 1,208.

"If the market manages to reach that (1,200-ringgit) level, then we will see an uptrend, but failure to do so will spark some correction," the trader said.

Traders said Chicago's gains would help shore up futures prices, which retreated on Friday in volatile trade in line with losses during the CBOT Project A screen trading session.

Bullish Malaysian palm oil data from private forecaster Ivan Wong had briefly supported prices on Friday. Wong put Malaysian palm oil stocks at the end of March at 1.01 million tonnes, down from 1.15 million tonnes at end-February.

He said Malaysian palm oil output was estimated to have risen by 1.7 percent to 725,000 tonnes in March from February, while exports in March were 735,000 tonnes compared with 640,814 tonnes a month earlier.

Traders said on Monday they pegged immediate support at 1,185 ringgit, with resistance seen at 1,208.

RUPIAH RULES INDONESIAN MARKET

In Indonesia, traders said the rupiah currency and movements in Malaysia would guide the market this week.

"I don't know how the market is going to behave this week, but I think it's still going to be quiet because people are still in the mood to wait and see," said one trader in Medan, North Sumatra.

"The rupiah and what happens in Malaysia will determine the market. If the rupiah drops again, the market will be very active."

Palm olein prices softened in late trading on Friday on the back of a strengthening rupiah. The currency edged higher after hitting its lowest level in about five and a half months in offshore trade on Thursday.

Olein finished the week at 3,175/3,200 rupiah/kg. Crude palm oil was quoted at 2,525 and 2,555 rupiah/kg in Jakarta based on the weekly tender held by the state marketing centre.

Kuala Lumpur traders said the market was expected to welcome weekend news Malaysia will supply India with palm oil worth $121 million in exchange for a contract awarded to an Indian firm to lay railway tracks in Malaysia.

Malaysia is the world's largest palm oil producer and India is one of its largest customers.-Reuters