MARKET DEVELOPMENT
23-09-2004
Cash Palm Oil Prices Mixed As Buying Interest Impr
22/09/04 KUALA LUMPUR (Dow Jones)--Asian cash palm oil prices were mixedWednesday, with the Malaysian market extending declines amid persistentpressure from technical selling and weak market sentiment.However, buying interest improved in Malaysia, as recent sharp fallstriggered some fresh demand at lower levels.Palm oil prices have been on the decline for the better part ofSeptember, dragged down mainly by losses in soyoil futures.At the Chicago Board of Trade, soyoil futures have dropped around 400points so far this month, on signs that U.S. soybean production this yearmay be among the highest ever seen, contrary to earlier talk of a poorcrop.The benchmark CPO futures contract on the Bursa Malaysia Derivativeshas fallen close to 200 ringgit ($1=MYR3.8) since early September. At 0728GMT, the contract was at MYR1,406/ton, down MYR10 from Tuesday afterbriefly falling below the MYR1,400 psychological support level.Trading activity in the cash market, which was sluggish in the pastfew days, improved Wednesday as buying interest for palm oil products forOctober and November/December delivery emerged."Now that prices have come off quite a bit, the interest is comingback," a trader said, adding that there were indications of renewed demandfrom consumers."Some of the traders who are buying are quite big suppliers to India,"the trader said.Despite the buying interest, the market was still weak, as there wasstill aggressive selling pressure, led by a major international tradinghouse.Traders said technical indicators suggest the potential for furtherdeclines for the rest of the week following the breach of the MYR1,400support level in the futures market Wednesday.They said the supply and demand outlook also appears slightly bearish."Production is good. People are saying it could be around 1.5 million(tons) in September, and October will also be a good production month," atrader said, adding that exports may struggle to keep pace withproduction.In the cash market, RBD palm olein for October shipment was offered at$440.00/ton, down $5/ton from Tuesday.RBD palm oil for October shipment was offered at $430.00/ton, alsodown $5/ton.In Indonesia, fresh buying interest also emerged following recentlosses, with RBD palm olein in Jakarta offered at 4,550 rupiah($1=IDR9,150) a kilogram, up IDR50 from Tuesday.CPO in Medan was offered at IDR3,850/kg, up IDR49 compared with theprice traded during Tuesday's government auction.
