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Tan Lee Lee
Kuala Lumpur, Dec 1: Indonesia palm oil prices are expected to be supported this week by prospects of higher exports after a cut in base prices of crude palm oil and by-products, regional traders said. But Malaysian November export data are expected to be bearish and could trigger selling there. The Indonesian price cuts could also undermine the Malaysian market, traders said. Activity in both markets was expected to be thin unless there was significant news, they added.
"Prices may rise to 3,200 rupiah/kg because of more exports," one trader in Jakarta said. Indonesian palm olein finished last week at 3,150-3,200 rupiah/kg in Jakarta amid steady demand. The Indonesian trade and industry ministry confirmed it was lowering the base prices for CPO and its by-products. Indonesian base prices for CPO fell to $535 a tonne from $595 previously, and RBD palm olein to $580 against $615. In Malaysia, traders said Indonesia's base price reductions would undermine sentiment further.
"Our prices had already beenaffected by the Indonesian cut last week but it would continue to undermine sentiment in near-term," said a trader in a Kuala Lumpur refinery plant. Malaysia players are also concerned over the November export figure. "Exports are going to be a lot lower than last month and more selling will be seen when the number comes out," a trader in Kuala Lumpur said. Cargo surveyor SGS (M) Sdn Bhd, which is releasing the data today, had earlier estimated the November 1-25 exports at 491,166 tonnes against 669,156 tonnes in the same corresponding period last month.
Malaysian traders also said the high local market prices could lead to technical downward adjustments. "We feel prices are still on the high side and more downward corrections are expected," one Malaysian trader said. Malaysia's benchmark, third month February futures contract on the Commodity and Monetary Exchange closed on Friday six ringgit down at 2,292 ringgit a tonne. Traders said the contract's support level is at 2,250 ringgit with resistance seenat 2,330. Sporadic student demonstrations in Jakarta have not affected trading, brokers said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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