Asian vegoils head higher on crude, govt action

KUALA LUMPUR, Oct 20 (Reuters) - Asian vegetable oil markets gained on Monday as investors took cues from higher crude oil prices while governments and commodity cartels looked towards stabilising global markets.
Malaysian palm soared 2.6 percent while some Dalian soyoil contracts <0#DBY:> hit limit up and Chicago soyoil <0#BO:> jumped 3.8 percent during Asian hours -- recovering from losses last week after fears of a recession sparked a sell-off.
Governments world-wide pouring cash into banks and financial markets have given some support to commodities. And commodity cartels appear to be taking some action with OPEC expected to cut oil output at an emergency meeting this week.
Indonesia and Malaysia, top palm oil producers, are separately looking at a string of initiatives to boost prices of palm oil, which have fallen 45 percent so far this year.
Indonesia might scrap its controversial export tax if prices drop to a monthly average of $650-$750 a tonne and Malaysia could announce biodiesel mandates on Tuesday in a bid to boost prices.
`Vegetable oil markets around Asia are shortcovering on the expected oil output cuts from OPEC,` said S. Paramalingam, executive director of Malaysian commodities brokerage Pelindung Bestari.
`In fact, these markets are desperate for any bullish news from governments, they need that helping hand to boost prices.`
The benchmark January palm contract <KPOF9> on Bursa Malaysia's Derivatives Exchange rose as much as 83 ringgit to 1,718 ringgit ($487) per tonne before setting 42 ringgit at 1,677 ringgit. January Dalian soyoil jumped 318 yuan to 6,716 yuan ($983) a tonne.
But other traders said the rally did not reflect slowing demand and oversupply in top vegetable oil consumers India and China, which are in the midst of harvesting bumper soybean crops and could be the worst hit by the recession.
China,the world's largest vegetable oil buyer, is expected to produce a record 19 million tonnes of soybeans while India said production of the grain could touch a historic high of 10.8 million tonnes.
`There is no fundamental basis, its more of a technical bounce with some broad-based gains in commodities,` said a trader with a leading foreign commodities brokerage. `Exports in Malaysia are still looking bearish, though.`
Exports of Malaysian palm oil products for Oct. 1-20 fell 10.2 percent to 722,227 tonnes from 803,882 tonnes shipped between Sept. 1 and 20, cargo surveyor Intertek Testing Services said on Monday. [ID:nKLR379980]
INDONESIA CASH TRADES
In Indonesia, crude palm oil price gained on Monday as recovery in Malaysian market lifted local prices but trading was thin as players awaited a decision on the palm oil export tax.
The state marketing centre, which sells palm oil from state plantations, said it sold palm oil at 4,378 rupiah ($0.446) a kg, up from 4,211 rupiah per kg on Friday.
Producers in Medan -- home to Belawan port, Indonesia's key port for palm oil exports -- did not hold an auction on Monday, a trader said.
`Both sellers and buyers are not very agressive particularly since the government has not yet decided on palm oil export tax,` said the Medan dealer.
The government so far has not announced any changes in palm oil export tax although palm oil prices in international market has fallen below a minimum reference price for tax of $550 a tonne.
In Jakarta, refiners offered refined, bleached, deodorised (RBD) palm olein, which is used in cooking oil, at 5,025-5,075 rupiah per kg, down from 5,150 per kg on Friday.
In the physical market in Malaysia, crude palm oil for October delivery stood at 1,710/1,720 ringgit a tonne in the southern region. Trades were done between 1,700 and 1,710 ringgit a tonne.
Palm, soy and crude oil prices at 1050 GMT
Contract Last Net chg Settle Open High Low Volume
PALM OIL NOV8 1720 + 66.00 1700 1720 1737 1687 452
PALM OIL DEC8 1675 + 45.00 1675 1686 1722 1659 1408
PALM OIL JAN9 1677 + 42.00 1677 1699 1727 1660 6799
PALM OIL FEB9 1680 + 40.00 1680 1707 1730 1664 987
CBOT soyoil* 36.86 + 1.36 35.50 N/A 37.16 35.60 N/A
NYMEX crude** 74.15 + 2.30 71.85 N/A 74.25 71.81 N/A
Palm oil prices in Malaysian ringgit per tonne
* Soy oil in U.S. cents per pound
** Crude in USD per barrel
($1=3.5200 ringgit, 6.8294 yuan, 9,810 rupiah)

Source : Thomson Reuters