Malaysian palm oil expected to trade above RM2,000 next week

Malaysian palm oil futures fell more than 1 percent on Friday, retreating from the previous session's seven-month high, hindered by a stronger ringgit and losses in U.S. soyoil on the Chicago Board of Trade.

KUALA LUMPUR: Crude palm oil (CPO) futures on Bursa Malaysia Derivatives are likely to trade between RM2,000 and RM2,050 a tonne next week on demand from China, India, Pakistan and the Middle East, said a dealer.

Interband Group of Companies senior trader Jim Teh said demand from the countries is likely to be sustained in early June.

However, he added that the market is also cautious on the escalating trade tension between the United States and China.

“The trade tension is likely to affect demand for commodities and the global economic environment,” said Teh.

On a Friday-to-Friday basis, spot month June 2019 jumped RM98 to RM2,049, July 2019 strengthened by RM99 to RM2,082 a tonne, August 2019 went up by RM90 to RM2,098 a tonne and September 2019 appreciated RM87 to RM2,120 a tonne.

May 2019 expired at RM1,957 a tonne on Wednesday.

Weekly turnover increased to 239,374 lots from 212,192 lots in the previous week, while open interest increased to 270,750 contracts from 260,566 contracts previously. On the physical market, May South increased RM80 to RM2,030 per tonne.

MThe Malaysian rubber market is expected to remain steady next week as Thailand, one of the major rubber producers, will start to cut its exports of the commodity under the 6th Agreed Export Tonnage Scheme, said a dealer.

Thailand will implement its export withholding pledge from next week based on the decision of International Tripartite Rubber Council (ITRC) in March 2019.

“According to the Rubber Authority of Thailand, the country will cut rubber exports by 126,240 tonnes starting next week for four months after a delay in implementing a supply cut agreement together with other ITRC countries,” said the dealer.

Thailand was initially supposed to trim its exports of natural rubber on April 1, along with Indonesia and Malaysia.

The three countries, which account for about 70 per cent of the world's natural rubber production, decided to curb exports by 240,000 metric tonnes collectively for four months to support prices.

The Kuala Lumpur rubber market will be closed on Monday as the replacement holiday for Wesak Day that falls on Sunday. The market will reopen on Tuesday. For the week just ended, the market saw range-bound trading tracking external factors.

On a Friday-to-Friday basis, the Malaysian Rubber Board's official physical price for tyre-grade SMR 20 rose 10 sen to 625.0 sen a kg, and latex-in-bulk gained five sen to 483.5 sen a kg.

The 5 pm closing price for tyre-grade SMR 20 was 6.5 sen higher at 621.5 sen a kg while latex-in-bulk increased four sen to 483.0 sen a kg

The Kuala Lumpur Tin Market (KLTM) is expected to witness a downtrend next week as the US-China trade tension has escalated.

A dealer told Bernama that despite an improvement in the oversupply situation, uncertainty in the global market loomed which had caused the world economy to experience a slowdown.

"The demand is there but due to market uncertainty, investors have stayed on the sidelines, which will cause the price to go downward," he said.  Tin price on the KLTM is expected to hover between US$19,300 and US$19,550 per tonne next week.

For the week just ended, demand came from China, South Korea, Japan, Taiwan, European countries, Pakistan, Bangladesh, the United Kingdom and the United States, as well as local buyers.

Meanwhile, on a Friday-to-Friday basis, the price on the KLTM was up US$280 to US$19,520 per tonne from US$19,240 per tonne the previous week.
Weekly turnover decreased to 93 tonnes from 101 tonnes.

The price differential between the KLTM and the London Metal Exchange was at a discount of US$25 per tonne on Friday from a discount of US$20 per tonne last week. - Bernama

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