KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is likely to trend lower at between RM2,080 and RM2,100 per tonne next week, amid fears of import curbs by India.
However, Interband Group of Companies senior trader Jim Teh believed India's potential restriction was merely a media speculation, and he expected the news effect on the market would just be temporary and mild.
"India is the world's biggest importer of edible oils, while palm oil is the cheapest vegetable oil.
"So we expect it would still buy from us rather than only purchase from Indonesia due to port congestion concerns," he told Bernama.
Teh also expressed optimism that the issue would be resolved after the government's urge to purchase more raw sugar and beef from India, coupled with Prime Minister Tun Dr Mahathir Mohamad's recent remarks of willing to work "diplomatically" with India to avoid any potential conflict.
News that India was considering restricting its palm oil imports from Malaysia emerged on Oct 11,2019 after Reuters reported that the Indian government was displeased with Malaysia following Dr Mahathir’s statement at the United Nations last month that India had "invaded and occupied" Jammu and Kashmir, and asked New Delhi to work with Pakistan to resolve the issue.
For the week just-ended, CPO futures moved sideways, mainly influenced by the India palm oil curbs news, as well as expectations of stronger exports and lower production.
Expectations of higher exports were supported by the improving palm oil products exports which increased to 684,907 tonnes in the first 15 days of October 2019 from 669,709 tonnes in the preceding month.
Meanwhile, lower production anticipation was due to recent news that Malaysian Palm Oil Board director-general Ahmad Parveez Ghulam Kadir had revised downward the estimates for 2019's palm oil production to 20 million tonnes from 20.3 million tonnes forecast previously.
On a Friday-to-Friday basis, the CPO futures contract for new spot month November 2019 rose RM59 to RM2,208 per tonne, December 2019 increased RM61 to RM2,246 per tonne, January 2020 was RM54 higher at RM2,287 per tonne and February 2020 advanced RM52 to RM2,328 per tonne.
Weekly turnover climbed to 228,164 lots from 170,974 lots in the previous week, and open interest expanded to 239,342 contracts from 226,076 contracts previously.
On the physical market, the CPO price for October South fell RM24 to RM2,106 per tonne. - Bernama