KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives would likely experience a technical correction next week to stabilise the market, said a dealer.
Interband Group of Companies senior palm oil trader Jim Teh said the futures contract would likely trade between RM2,500 and RM2,600 per tonne next week, as the COVID-19 outbreak is causing a supply disruption.
"The new export tax figure of six per cent released by the Malaysian Palm Oil Board coupled with COVID-19 may partially impact CPO demand,” he told Bernama.
He said in view of COVID-19, many CPO shipments are not cleared at Chinese ports, a situation which is affecting supplies.
The CPO futures market fell significantly on Wednesday on export tax concerns but this was temporary as the market recovered the following day, boosted by expectations of lower output, although concerns on the fast-spreading COVID-19 capped the gains.
The market finished in a cautious tone as sentiment remained affected by the outbreak.
On a Friday-to-Friday basis, the CPO futures contract for March 2020 decreased RM17 to RM2,683 per tonne, April 2020 lost RM8 to RM2,652 per tonne, May 2020 trimmed RM5 to RM2,622 per tonne and June 2020 rose RM2 to RM2,598 per tonne,
Weekly turnover increased to 293,695 lots from 339,279 lots in the previous week, while open interest depreciated to 315,582 contracts from 331,097 contracts.
On the physical market, the CPO price for March South stood at RM2,700 per tonne. - Bernama