JAKARTA, Dec 19: Malaysian crude palm oil futures rose slightly on Monday, with forward months holding above 1,400 ringgit a ton on expectations China may be looking for cargoes when its peak winter season is over.

The market ignored high physical stocks as traders expect European buyers to step in during the first quarter for biofuel. In addition, European vegetable oil buyers normally pick up cargoes from March onwards.

At Monday’s close the benchmark third-month contract on Bursa Malaysia Derivatives, March, was up four ringgit at 1,405 ($371.8) a ton. April was up two at 1,405.

I think prices should hover around 1,390 to 1,410 ringgit in the days ahead unless something drastic happens, said one trader.

Overall volume was 3,399 lots of 25 tons each, up sharply from Friday’s 2,425 lots. The market can breach 6,000 lots on a typically busy day.

Crude palm oil manufacturers are not afraid of holding on to stocks, said one trader. They know demand will flow in during the first quarter. High stocks are not a reason to panic.

Traders added that expectations of a seasonal decline in production in Malaysia during the December to February period would also prevent a fall in prices.

Production will be declining about five to seven per cent this month. We expect a 10 per cent fall in January and maybe another 10 per cent fall in February, said one trader.

Data released last week showed end-November stocks at a record 1.6 million tons following a slowing in demand after the end of the major festivals in Asia.

The market will be closely eyeing export figures which would come out tomorrow, said one trader. I would think export levels would be about the same as the same period of last month.

Export estimates for palm oil for the first two weeks of December were about six per cent lower against figures tracked at mid-November, the market’s main cargo surveyor Societe Generale de Surveillance said.

On the spot market, offers for December closed at 1,390 ringgit a ton, against bids at 1,385. Trades were reported at between 1,380 and 1,385 ringgit in Malaysia’s southern and central regions.

It will be a flat market with the year-end holidays approaching and also because of a softer products market, said one trader, adding that the commodity would likely trade in a range of 1,365-1,385 ringgit.

—Reuters