Profit taking in palm oil market next week?

  • Markets
  • Saturday, 08 Sep 2018

Malaysian palm oil futures extended a downward trend, closing 0.3 percent lower on Monday as weak demand weighed on prices.

KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to see profit taking next week as oversupply concerns loom in line with the seasonal trend, said a dealer.

This is more so in a short-trading week as investors will avoid taking long positions.

Next week, the market will be closed for the King's Birthday (Monday) and Awal Muharram (Tuesday).

Interband Group of Companies Senior Trader Jim Teh said the CPO price will likely be trading at a lower range of between RM2,130 and RM2,180 per tonne next week.

The Malaysian Palm Oil Board (MPOB) is expected to announce the inventories for the first 10 days of September.

“The inventory is expected to be at 2.4 million tonnes,” he told Bernama hereSaturday.

MPOB reported a 1.26 per cent monthly rise in July inventory levels to 2.21 million tonnes from 2.18 million tonnes at end-June.

The data also showed production rose 12.79 per cent to 1.5 million tonnes from 1.33 million tonnes and palm oil exports were up 6.75 per cent at 1.20 million tonnes from 1.12 million tonnes the previous month.

On a Friday-to-Thursday basis, September 2018 and October 2018 rose RM13 to RM2,213 and RM2,244 per tonne respectively, while November 2018 added RM18 to RM2,266 and December 2018 was RM21 higher at RM2,294 per tonne.

Weekly turnover declined to 130,674 lots from 147,529 lots previously, while open interest was lower at 284,244 contracts versus 303,962 contracts last week.
On the physical market, September South was at RM2,230 per tonne, up RM15 from last week's RM2,215 per tonne.

In the rubber market dealers expect prices to trend higher next week tracking the ringgit's movement against the US dollar and global crude oil prices., a dealer said.

A dealer said rubber prices would also move in tandem with those of other commodities, as well as regional futures markets, namely the Tokyo Commodity Exchange and Shanghai Futures Exchange.

“Crude oil prices were higher on Friday as the US crude oil inventory fell,” the dealer said.

He also expects the commodity to get buying power from India, following the flood in Kerala state.

The flood had resulted in a rubber shortage of nearly 20 per cent in India's tyre industry, he added.

On a Friday-to-Thursday basis, the Malaysian Rubber Board's noon price for tyre-grade SMR 20 rose 5.5 sen to 540.5 sen a kg, and latex-in-bulk was 6.5 sen higher at 409 sen a kg.

The 5 pm unofficial closing price for SMR 20 declined 5.5 sen to 540 sen a kg, while latex-in-bulk gained seven sen to 409.5 sen a kg.

Next week, the market will resume its trading on Wednesday after the Agong's Birthday (Monday) and Awal Muharram (Tuesday) public holidays

The tin price on the Kuala Lumpur Tin Market (KLTM) is expected to rise next week on active short covering after heavy losses during the week, a dealer said.

“During the week, the tin price went down sharply following the easing of prices in copper which were hit by concerns over demand, amid a United States and China trade war,” he told Bernama.

He said the KLTM would also be influenced by the metal's performance on the benchmark London Metal Exchange (LME).

"From a technical perspective, we believe the price will hover around US$18,700 to US$18,900 for next week," he added.  

The local market will be closed on Monday in lieu of the King's birthday on Sunday and on Tuesday for Awal Muharam, the Islamic New Year.

On a Friday-to-Thursday basis, the KLTM price decreased by US$240 to US$18,810 a tonne, while turnover for the week increased to 245 tonnes from 128 tonnes.

The tin price on the LME slipped US$140 to US$18,840 a tonne.

Throughout the week, buying demand came mainly from China, South Korea, Japan, Taiwan, Germany, the United Kingdom, and a local seller.

The price differential between the KLTM and LME for the week just ended stood at a discount of US$50 a tonne from a premium of US$70 a tonne last Thursday. - Bernama

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palm oil , rubber , tin , markets , Bursa , futures , derivatives , KLTM , price , trading ,


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