KUALA LUMPUR – The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is likely to see a technical correction, but on a downside bias, in the upcoming holiday-shortened trading week, with Malaysia to celebrate Merdeka on Tuesday.
Interband Group of Companies senior palm oil trader Jim Teh told Bernama that the increasing stockpiles in producing countries Indonesia and Malaysia are expected to weigh on market sentiment.
“There is surplus palm oil in the market, with Indonesia having a stockpile of around four million tonnes and Malaysia about 1.5 million tonnes. As the current price is considerably high, the bubble could burst very soon.
“In addition, with the production cost being around RM1,500 to RM1,800 per tonne, the current CPO price is seen as paper price and speculative play. Therefore, it is already an excellent price for the commodity.”
Trader David Ng said the recent exports report will likely affect sentiment next week.
Independent inspection company AmSpec Agri Malaysia on Wednesday said exports of Malaysian palm oil products for August 1 to 25 fell 12.27% to 988,809 tonnes from 1.13 million tonnes shipped during the same period last month.
“Given the recent weakness in export performance, we expect to see the price trading in a tight range with a downside bias at between RM4,100 and RM4,380 next week.”
For the week just ended, Malaysian CPO futures saw choppy trading, taking a cue from benchmark regional markets, the soybean oil market movement, slower production, and weaker export sentiment.
On a Friday-to-Friday basis, September increased RM46 to RM4,560 a tonne, October surged RM72 to RM4,443 a tonne, and November rose RM68 to RM4,333 a tonne.
December gained RM57 to RM4,250 a tonne, January 2022 added RM35 to RM4,174 a tonne, and February 2022 improved RM5 to RM4,096 a tonne.
Weekly volume slipped to 292,390 lots from 339,179 in the previous trading week, while open interest narrowed to 251,315 contracts versus 263,451 previously.
The physical CPO price for September South was unchanged at RM4,600 a tonne yesterday. – Bernama, August 28, 2021
