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Asia palm oil: market seen quiet, eyes crop data

KUALA LUMPUR: The Asian palm oil market is expected to be quiet this week with Malaysian players awaiting crop projections for January, regional traders said.

Private crop forecaster Ivan Wong is expected to release his interim January crop data on Tuesday.

"Barring any big surprises in the crop numbers, the market will trade uncertainly in a very narrow range," said a trader in Kuala Lumpur.

The market has traded quietly following uninspiring Palm Oil Registration and Licensing Authority (PORLA) palm oil crop/stock data for December released last week.

PORLA said production fell by 8.38 percent to 905,994 tonnes in December 1999 from 988,854 in November.

It said end-December stocks were down 6.16 percent to 1.18 million tonnes from 1.25 million at end-November and 825,604 tonnes at end-December 1998.

The market is also eyeing exports data for January 1-25 from cargo surveyor Societe Generale de Surveillance (SGS) due on Tuesday.

SGS put Malaysian palm oil exports for January 1-20 at 420,459 tonnes, down from 594,847 tonnes in the first 20 days of December.

"Exports are likely to remain slow, so production figures will be closely watched," said another Kuala Lumpur trader.

Malaysia's benchmark third position palm oil futures contract closed on Friday at 1,142 ringgit a tonne compared with 1,150 ringgit a week earlier.

Traders pegged support for the third month contract at 1,130 ringgit and resistance at 1,180.

Traders said concerns over palm oil exports to India following a hike in Indian import duty would continue to limit the market's upside in the near to medium term.

India, a major buyer of Malaysian palm olein, recently raised the import duty on refined edible oils to 27.5 percent from 16.5 percent. Such an increase could curb Indian demand for vegetable oils.

SGS said India bought 113,521 tonnes of Malaysian oil between January 1 and 20, down from 156,319 tonnes in the same period of December.

Indonesian olein buyers would still wait for prices to fall before taking positions, traders said.

"I think it's going to be very quiet. It seems that buyers are still in their wait-and-see mood to see how prices behave," said one trader in Jakarta.

Traders said any improvement in the Malaysian market would help boost sentiment in the dull Indonesian market.

Olein finished the week at 2,650 rupiah/kg in Jakarta, compared with 2,750 at the close on Thursday.

Crude palm oil was quoted at 2,308 rupiah/kg in Jakarta, based on the weekly tender organised by the state marketing centre, which sells CPO produced by state plantations. -Reuters