KUALA LUMPUR – The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is forecast to trade with a downside bias ahead of a slew of market-moving data to be released next week.
The Malaysian Palm Oil Board (MPOB) is expected to release production, stocks and export data for May, which is set to influence the overall market performance.
End-month inventory is expected to be higher, Singapore-based Palm Oil Analytics owner and co-founder Sathia Varqa told Bernama.
“Next week is a four-day trading week, with blockbuster data to be released by MPOB, the Malaysian Palm Oil Association, and the United States Agriculture Department, as well as June 1-10 figures by cargo surveyors.
“In addition, the Indonesian government will make a decision on export levy.”
Palm oil trader David Ng projected the key psychological support to remain at the RM4,000 level.
For the week just ended, the market was mostly lower on the back of weaker soybean oil prices, amid worries over the stocks’ position, rising Covid-19 cases, and the total lockdown.
CPO futures were higher on Wednesday and Thursday before ending the week lower as investors booked profits ahead of the long holiday weekend and due to the bearish soybean market after the commodity hit a 10-year high in the previous session.
CGS-CIMB Securities Sdn Bhd in a note said coronavirus infections are indirectly impacting productivity at estates due to the delay in allowing the return of 32,000 foreign workers.
In the first four months of 2021, Malaysia’s CPO output fell 6% year-on-year to 5.18 million tonnes due to producers’ inability to raise productivity owing to worker shortages.
“As such, there are likely downside risks to our current CPO supply estimates for Malaysia of 19.4 million tonnes (up 1.3%) this year,” said CGS-CIMB.
On a weekly basis, June fell RM71 to RM4,230 per tonne, but July rose RM41 to RM4,201 per tonne, August gained RM119 to RM4,129 per tonne, and September improved RM170 to RM4,064 per tonne.
Weekly volume surged to 386,895 lots from 284,060 in the previous trading week, while open interest dropped to 230,652 contracts versus 243,856 before.
The physical CPO price for June South slipped RM110 to RM4,250 per tonne.
The domestic market will be closed on Monday in conjunction with the official birthday of Yang di-Pertuan Agong Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah. – Bernama, June 5, 2021
