June 19, 2015 / 10:33 AM / 4 years ago

VEGOILS-Palm edges up as ringgit weakens, but posts 2nd weekly drop

(Updates prices, adds paragraph and quote on Indonesian biodiesel levy)
    * Prices down 1.7 pct in 2nd weekly fall
    * Ringgit down 0.8 pct to 3.7390 per dollar
    * Palm production seen easing during Ramadan - traders
    * Indonesia looking to impose $20/T levy on biodiesel - minister

    By Anuradha Raghu
    KUALA LUMPUR, June 19 (Reuters) - Malaysian palm oil futures recovered after hitting three-week lows on Friday
as the ringgit eased, although steep losses earlier this week dragged the tropical oil to its second straight
weekly loss. 
    Market players are also anticipating crude palm oil production in Malaysia, the world's second-largest grower,
to weaken during the Muslim holy month of Ramadan as plantation workers go on holiday.        
    "Market is seeing good buying interest at current levels," said Lingam Supramaniam, director at Malaysia-based
commodities firm Pelindung Bestari. "After the recent selloff, the worry on production in June and July are
keeping buyers alert."
    The Malaysian ringgit dipped 0.8 percent on Friday, after rising to 3.7015 against the dollar in the
previous session. A cheaper ringgit makes palm an attractive option for overseas customers. 
    The September palm oil contract on the Bursa Malaysia Derivatives exchange slipped to 2,227 ringgit
a tonne in early trade, its lowest since May 29, before settling 0.1 percent higher at 2,240 ringgit ($599.09) by
Friday's close.
    The pull-up was not enough to prevent palm from another weekly fall. Prices for the week were down 1.7
percent.    
    Total traded volume stood at 32,548 lots of 25 tonnes each, below the usual 35,000 lots.
    The holy month of Ramadan, which is observed by fasting and feasting, began on Thursday and will be followed
by the Eid al-Fitr celebrations in mid-July.     
    The festival typically drives up consumption of edible oils, including in top palm growers Indonesia and
Malaysia, both Muslim-majority countries. 
    The market is also keeping a watch on cargo surveyor export data for overseas shipments of palm oil between
June 1-20, due to be released on Saturday. 
    "If exports maintain the pace or are slightly lower than May, there might be some drawdown in end-stocks,"
said a trader with a foreign commodities brokerage in Kuala Lumpur. "And I don't think you can import from
Indonesia, as they'll need the oil for themselves."
    Indonesia is considering levies on 24 palm products, including kernel shells and biodiesel, in a regulation
that will take effect from July 1, senior government officials said. 
    The range of the levies will be between $10 and $50, and the levy considered for biodiesel is $20 per tonne,
Minister of Industry Saleh Husin said. 
    Indonesian crude palm oil Public Service Agency President-Director Bayu Krisnamurthi said the levies are
unlikely to impact Indonesia's biodiesel competitiveness in the global markets. 
    "On the other hand, we are creating a new huge domestic market...we are encouraging higher domestic
consumption," he said.     
    In other markets, oil eased below $64 a barrel on Friday as concern over Greece and a forecast that U.S. shale
oil output would keep growing this year countered signs of a pickup in demand.  
    The U.S. July soyoil contract rose 0.9 percent in late Asian trade, while the most active January
soybean oil contract on the Dalian Commodity Exchange dropped 0.9 percent. 
  Palm, soy and crude oil prices at 1008 GMT
                                                                                                                  
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      JUL5    2235    +5.00    2222    2250     632
  MY PALM OIL      AUG5    2238    +1.00    2227    2258    4174
  MY PALM OIL      SEP5    2240    +3.00    2227    2260   18796
  CHINA PALM OLEIN JAN6    5114   -32.00    5044    5124  664172
  CHINA SOYOIL     JAN6    5848   -54.00    5796    5868  499496
  CBOT SOY OIL     JUL5   32.54    -0.80   32.16   32.59    6385
  INDIA PALM OIL   JUN5  449.50    -0.80  449.50  453.20     375
  INDIA SOYOIL     JUN5  612.90    +2.90  610.80  613.30    3390
  NYMEX CRUDE      JUL5   59.74    -0.71   59.63   60.56    8356
                                                                                                                  
  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil and RBD palm olein in Chinese yuan per tonne
  India soy oil in Indian rupee per 10 kg
  Crude in U.S. dollars per barrel
 
($1 = 3.7390 ringgit)
($1 = 6.2095 Chinese yuan)
($1 = 63.60 Indian rupees)

 (Additional reporting by Bernadette Christina in JAKARTA; Editing by Biju Dwarakanath)
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