Malaysian palm oil futures ease slightly

JAKARTA: Malaysian palm oil futures eased slightly on Friday due to profit-taking after five days of gains, with trading seen range-bound as the focus shifts to US lawmakers who are struggling to reach a deal to avert a possible sovereign default next week.

By the mid-day break, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had edged down 0.5 per cent to RM2,378 per tonne.

Total traded volume stood at 13,574 lots of 25 tonnes each, higher than the usual 12,500 lots.

"It is purely profit-taking after four days of being up," said a trader with a foreign commodities brokerage, adding that the debt standoff in the United States was holding traders back ahead of the weekend.

Republican lawmakers, who have not passed budget funding, on Thursday offered a plan that would extend the US government's borrowing authority for several weeks, staving off a default that could come as soon as October 17.

Palm prices are on course for a three per cent gain this week, the highest weekly gain since mid-August.

"It has been a very good week," the trader added. "A lot of people are bearish in the market, but the MPOB report was a big surprise ... everybody was looking for about 1.9 million tonnes.

Malaysia's palm oil stocks in September edged up to 1.78 million tonnes, a smaller-than-expected rise as output of the tropical oil grew slower than anticipated and exports remained healthy, data from the Malaysian Palm Oil Board showed on Thursday.

In other data, exports of Malaysian palm oil products for October 1-10 rose 22.5 per cent to 550,877 tonnes from 449,821 tonnes shipped during September 1-10, cargo surveyor Societe Generale de Surveillance said.

Palm oil exports from Indonesia, the world's top producer, rose four per cent to 1.455 million tonnes in August, according to Bank Indonesia data on Thursday.

"The lower prices are because of the ringgit's strength," said a Jakarta-based palm trader. "This week, our palm oil production data did not increase as much as what people expected, and exports remain good."

Asian currencies rose as risk sentiment improved on growing hopes for a deal in Washington.

Technicals showed Malaysian palm oil is due for a fall to RM2,349 per tonne, as a short-term uptrend is peaking, Reuters market analyst Wang Tao said.

In other markets, Brent oil slipped towards US$111 per barrel but was still on track to end the week higher after an overnight jump in prices due to concern over supply risks in the Middle East and hopes of a deal to end the US budget crisis.