Palm oil seen to be in range bound trade next week

  • Business
  • Saturday, 22 Sep 2018

With the escalating tariff conflict, we may see China turning to Argentina as an alternative to purchase soybean oil instead of from the US, says a trader.

KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives will likely remain in range-bound trading at between RM2,130 and RM2,170 next week, as traders may adopt a wait-and-see attitude, amid the ongoing trade tensions between the United States (US) and China, a dealer said.

Interband Group of Companies Senior Trader Jim Teh said uncertainties over the conflict had put a pressure on the prices of most commodities.

“With the escalating tariff conflict, we may see China turning to Argentina as an alternative to purchase soybean oil instead of from the US,” he told Bernama.

On the local front, he said the higher level of inventory was also keeping prices low, as August and September were usually known for production peak, especially for Malaysia and Indonesia.

"However, as Deepavali is coming in November, we hope to see more purchases.

“Moreover, the zero per cent export tax duty in October announced by the Customs Department will likely spur more buying interest among traders, namely India, Pakistan and China, in the coming weeks,” said Teh.

He also said the physical price which has remained above the RM2,000 benchmark is still supportive of the CPO market. For the holiday-shortened week, the local market was easier, tracking the decline in the soybean oil market on the Chicago Board of Trade amid Washington's tariff offensive against Beijing.

On a Friday-to-Friday basis, new spot month October 2018 dropped RM94 to RM2,116 per tonne, November 2018 lost RM96 to RM2,126 per tonne, December 2018 was down RM104 to RM2,143 per tonne and January 2019 decreased RM112 to RM2,173 per tonne.

Weekly turnover increased to 228,370 lots from 123,174 lots previously, while open interest was higher at 310,474 contracts versus 305,584 contracts last week.

On the physical market, September South was at RM2,130 per tonne, down RM90 from last week's RM2,220 per tonne. - Bernama


The Malaysian rubber market is expected to trade range bound next week, due to external factors including the uncertainties in the ongoing trade spat between the United States (US) and China, said an industry expert.

Malaysian Rubber Glove Manufacturers Association President Denis Low Jau Foo said the buying and selling activities would likely maintain, not declining nor improving.

"Prices would probably move slightly higher or lower buy a few sen, which is deemed to be normal and stable.

"This is because traders are still unclear of the situation on how China's enforcement of tariff on various synthetic rubber and tyre products by the US would impact other industry players including here in Malaysia," he told Bernama.

However, he said firmer regional rubber futures market and higher oil prices would help cushion any further fall in prices of local natural rubber.

For the holiday-shortened week, the local market was mostly in downtrend, weighed by the weaker sentiment in the regional rubber markets and the trade conflict between the US and China.

On a Friday-to-Friday basis, the rubber market was mixed, with the Malaysian Rubber Board's tyre-grade SMR 20 mid-day price unchanged at 546.00 sen per kg while latex in bulk eased 3.5 sen to 411.50 sen per kg.

The 5 pm unofficial closing price for SMR 20 added 0.5 sen to 545.50 sen per kg, while latex in bulk fell five sen to 411.00 sen per kg. - Bernama


The Kuala Lumpur Tin Market (KLTM) is expected to trade higher next week on improved external sentiments, dealers said.

A dealer said after hitting the psychological level of US$19,000-a tonne level on Friday, the tin price was expected to continue its uptrend momentum to as high as US$19,300 a tonne as investors confidence returns due to subsiding concerns about the Sino-US trade war.

Support level is spotted at US$18,900 per tonne.

He said tin price would also be influenced by the performance of the metal on the benchmark London Metal Exchange (LME) and the movement of other base metal prices especially copper.

On a Friday-to-Friday basis, the KLTM price rose US$30 to US$19,000 a tonne and turnover for the week increased to 165 tonnes from 156 tonnes.

The KLTM was closed on Monday in lieu of the Malaysia Day public holiday which fell on Sunday.

Meanwhile, the tin price on the LME inched up US$5 to US$19,025 a tonne.

Throughout the week, buying demand came mainly from China, South Korea, Japan, Taiwan, Germany, Pakistan, Bangladesh and the United Kingdom.

The price differential between the KLTM and the LME for the week just ended stood at a discount of US$25 a tonne from a discount of US$50 a tonne in the previous week. - Bernama


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