CPO futures to trade lower next week

  • Business
  • Saturday, 16 Nov 2019

KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to trade lower on profit-taking next week with the benchmark moving between RM2,300 and RM2,400 per tonne, industry analysts said.

Singapore-based Palm Oil Analytics owner and co-founder Dr Sathia Varqa said industry players would focus on Malaysia’s export data from cargo surveyors, as well as production figures for the Nov 1-20 period from the Malaysian Palm Oil Association (MPOA).

"The market will continue to be on correction path. Besides, industry players will be watching for any supportive policy announcement from the Prime Minister or the Primary Industries Minister at the International Palm Oil Congress and Exhibition (PIPOC) on Nov 19, ” he told Bernama.

Sathia, who will also be a speaker at the event, said he would be sharing his insights on the outlook for the commodity.

Meanwhile, Interband Group of Companies senior palm oil trader Jim Teh said despite global economic uncertainties, palm oil price managed to stay on a healthy level.

"As prices has been appreciating in the last couple of weeks, it is time for a technical correction. Besides, the months of November and December are typically lower (in terms of production) as traders might want to square off their position towards end of the year, ” he said.

On another note, the idea mooted by Primary Industries Minister Teresa Kok Suh Sim to set up more cooperatives through the Malaysian Palm Oil Board (MPOB) recently was seen as positive especially to curb excessive profit-taking by middlemen and provide smallholders the income they deserve.

"Middlemen could take up to 30 to 40 per cent more profits compared to that of smallholders. This has to stop even though CPO prices have increased, smallholders are still making only marginal profit, ” Teh added.

Throughout the week, the market was mixed, tracking the performances of soybean prices on the Chicago Board of Trade (CBOT), crude oil price and cargo surveyor data.

"The highlight of the week was India and China’s commitment to buy Malaysian palm oil with the signing of two memoranda of understanding, calming worries of lower exports among industry players, ” said another dealer.

On a Friday-to-Friday basis, the CPO futures contract for November 2019 added RM34 to RM2,560 per tonne and February 2020 was RM7 higher at RM2,607 per tonne.

However, December 2019 decreased RM4 to RM2,520 per tonne and January 2020 marginally dropped RM2 to RM2,571 per tonne.

Weekly turnover fell to 262,598 lots from 287,775 lots in the previous week, while open interest narrowed to 256,165 contracts from 285,101 contracts previously.

On the physical market, the CPO price for November South gained RM70 to RM2,550 per tonne.


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