KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to trade in a cautious tone this week amid the ongoing 2019 novel coronavirus outbreak, said dealers.
Interband Group of Companies senior palm oil trader Jim Teh said the futures contract would likely trade between RM2,800 and RM2,900 per tonne next week, as the outbreak may cause a pandemic.
Meanwhile, Singapore-based Palm Oil Analytics owner and co-founder Dr Sathia Varqa said the CPO futures market should see a rebound next week after a deep fall this week, but it all depends on how the spread of coronavirus is contained and controlled.
"Next week, the market will also be focusing on assessing Malaysia's full month January production estimate from the Malaysian Palm Oil Association, ” he told Bernama.
CPO futures market fell significantly on Tuesday, its biggest intraday drop in more than seven years, on concerns that the spread of coronavirus in China would cut demand of the vegetable oil from the second-largest importer.
It recovered the following day, boosted by expectations of lower output, although concerns on the fast-spreading coronavirus capped the gains. The market finished in a cautious tone as sentiment remained affected by the outbreak.
On a Friday-to-Friday basis, the CPO futures contract for February 2020 dropped RM291 to RM2,640 per tonne, March 2020 decreased RM278 to RM2,631 per tonne, April 2020 lost RM258 to RM2,604 per tonne, and May 2020 trimmed RM239 to RM2,573 per tonne.
Weekly turnover increased to 339,279 lots from 240,247 lots in the previous week, while open interest appreciated to 331,097 contracts from 266,201 contracts.
On the physical market, the CPO price for February south lost RM320 to RM2,700 per tonne. - Bernama
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