KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to trend lower next week on profit-taking after buying activity persisted this week with the exception of Friday, said a dealer.
Interband Group of Companies senior trader Jim Teh told Bernama trading would likely range between RM2,050 and RM2,100 a tonne per tonne amid fears of a mild global recession, the trade dispute between the US and China, as well as Brexit.
However, he said, so long as prices stay above the RM2,000 per tonne level, it will still be profitable for the oil palm plantation industry.
On the local front, it was reported on Friday that India planned to curb palm oil imports from Malaysia, and France's exclusion of palm oil from its biofuel scheme would further add pressure on prices and demand for Malaysian CPO.
The French legislation will remove palm oil from a list of permitted biofuels from January 2020 and eliminate related tax advantages.
"The news about India's plan will have a quite a big impact, especially during the key buying period ahead of the Deepavali celebration, ” another trader, David Ng said.
The news came after a source said the Indian government was displeased with Malaysia after Prime Minister Tun Dr Mahathir Mohamad said at the United Nations last month that India had "invaded and occupied Jammu and Kashmir " while asking New Delhi to work with Pakistan to resolve the issue.
India, which imports about 150,000 tonnes of palm oil a month, is the second largest buyer of the commodity from Malaysia.
For the week just ended, CPO futures traded mostly higher in tracking the firmer Chicago Board of Trade, China's Dalian Commodity Exchange and lower local CPO production.
On a Friday-to-Friday basis, the CPO futures contract for October 2019 rose RM22 to RM2,118 per tonne, November 2019 and December 2019 increased RM36 each to RM2,149 and RM2,185 per tonne respectively, while January 2020 was RM35 higher at RM2,233 per tonne.
Weekly turnover declined to 170,974 lots from 194,809 lots in the previous week and open interest expanded to 226,076 contracts from 222,635 contracts previously.
On the physical market, the CPO price for October South increased RM20 to RM2,130 per tonne. - Bernama
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