Middle Eastern countries have bought 70 per cent of an extra 70,000 tonnes of palm oil cargoes needed for the Muslim holy month of fasting that begins in the third week of August, Southeast Asian traders said today.

Countries in the region usually buy an additional 150,000 tonnes for the Ramadan fasting observance, where fasting in the day is followed by elaborate feasts at night, but have cut down on orders because of ample port stocks and a recent run-up in prices.

“Our people in Saudi and other neighbouring countries have estimated that additional Ramadan demand is about 70,000 tonnes and it’s nearly all covered,” a local broker said. “We expect orders to slow down in September.”

Outside Ramadan months, the region buys 60,000-70,000 tonnes a month of refined, bleached and deodorised (RBD) palm olein, which is used as cooking oil, and to make margarine and sweets.

Another trader confirmed the deals and said that cargoes of up to 50,000 tonnes were purchased at between US$650 and US$740 a tonne free on board (FOB).

“The Middle Eastern buyers were cautious and waiting for the market to fall another US$50 to US$60 per tonne but news of tight stocks in Malaysia has seen them pick up whatever they can get, regardless of the higher prices,” said the trader.

“Now, there may be some buying interest to meet all of the Ramadan requirements after benchmark Malaysian prices fell sharply this week.”

Malaysian crude palm oil futures, which determine the cash prices of refined palm products, have been struggling to recover this week after a sell-off driven by higher vegetable oil stocks coming from U.S. soyoil and weaker equity markets.

RBD palm olein for August delivery was sold at US$740 a tonne on Tuesday in Malaysia, according to Reuters data, compared to US$755 at the close of last week. – Reuters Source : Business Times

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