KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to remain sluggish next week as weaker demand continues to weigh on prices.
Palm oil trader David Ng said, however, expectations of a lower stockpile in March is seen as supporting prices ahead of a key crop report due to be released next week.
"We locate the support level at RM2,200 and resistance level at RM2,320, ” he told Bernama.
For the week just ended, the market traded mostly easier in line with the downward trend in the global futures markets, as well as subdued oil prices.
On a Friday-to-Friday basis, the CPO futures contract for April 2020 fell by RM167 to RM2,320 per tonne, while for May, it declined by RM130 to RM2,296, as for June, it fell RM133 to RM2,245 and July, down RM129 to RM2,219 per tonne.
Weekly turnover increased to 310,509 lots from last Friday's 305,181 lots, while open interest rose to 264,378 contracts from 262,730 contracts
Due to weak sentiment, the Malaysian rubber market may be subdued next week.
A dealer said due to uncertainties, trading volume was expected to be lower due to lack of demand, dependence on global crude oil prices, as well as the strength of the ringgit.
"Benchmark oil prices fell on Friday after a spike by a record 25 per cent yesterday following US President Donald Trump's comment on Twitter that he expects Russia and Saudi Arabia to back away from their price-cutting war, ” he told Bernama on Saturday.
The dealer said Trump suggested massive production cuts could be on the way, while Saudi Arabia called for an urgent meeting between the Organisation of the Petroleum Exporting Countries (Opec), Russia and other unnamed nations to restore "balance" to the oil market.
Meanwhile, the weaker economic growth will affect CPO and oil demand.
On Friday, Bank Negara Malaysia (BNM) governor Datuk Nor Shamsiah Yunus said Malaysia’s economy would see a contraction of -2% in the worst case and a mere growth of 0.5% in 2020, largely due to the Covid-19 impact.
"As Covid-19 continues to evolve, the restriction will continue in several countries, including advanced economies, and operation shut down will continue to dampen external demand for exports. But in the second half, it is expected to recover, ” she told a press conference on Friday.
Nor Shamsiah said the pandemic had impacted global demand, caused supply chain disruptions and travel restrictions. - Bernama
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