KUALA LUMPUR – The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives closed lower today due to weaker export demand amidst the reintroduction of the export tax.
Last month, the Malaysian government had set the CPO export tax at 8% starting January 1 to 31, marking the end of the zero export tax enjoyed from June to December 2020.
Palm oil trader David Ng said exports had continued to be sluggish, and it had been further dampened by the export tax which may curb short-term demand.
According to cargo surveyor Intertek Testing Services data, Malaysia’s export for January 1 to 10 period fell by 35.44% to 260,080 million tonnes, from 402,880 million tonnes in the same period in December 2020.
“We locate the next support level at RM3,750 per tonne and resistance at RM3,850 per tonne,” he said.
Meanwhile, Singapore-based Palm Oil Analytics owner and co-founder Dr Sathia Varqa said the CPO market was looking for a clearer direction to move higher, but this was hampered by the lower January production data from the Southern Peninsula Palm Oil Millers’ Association (SPPOMA).
He said the decline in production was due to the excessive rainfall in Johor and Pahang – both states being among the country’s biggest oil palm cultivators.
At the same time, the Malaysian Palm Oil Board (MPOB) revealed that CPO stocks had slumped 19.2% to 583,761 tonnes month-on-month in December 2020 from the 722,451 tonnes in November 2020, while production slid 10.59% m-o-m to 1.33 million tonnes from 1.49 million tonnes previously.
At the close, the CPO futures contract for January 2021 slipped RM27 to RM3,970 per tonne, February 2021 and March 2021 shed RM33 each to RM3,941 per tonne and RM 3,797 per tonne, respectively, while April 2021 weakened RM29 to RM3,680 per tonne.
Total volume increased to 55,744 lots from 44,074 lots last Friday, while open interest retracted to 166,160 contracts from 206,172 contracts previously.
The physical CPO price for January South eased RM30 to RM4,000 per tonne. – Bernama, January 11, 2021
