KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to remain sluggish next week as the market is left with no near-term catalyst, dealers said.
Palm oil trader David Ng said the weaker crude oil prices will continue to weigh on market sentiment for the CPO.
"Expectations of higher production in coming weeks, which may contribute to higher stock levels in the country, are also not supporting the market, ” he said.
Meanwhile, Interband Group of Companies senior palm oil trader Jim Teh said the market is expected to see some technical corrections but on downside bias next week, trading between RM2,200 and RM2,300 a tonne.
He said despite Ramadan being the month of high demand for palm oil in past years, the demand has somewhat slowed down this year, dampened by lockdowns in major markets amid the COVID-19 pandemic.
However, palm oil prices currently are still considerably high, with the production cost of only between RM1,500 and RM1,600 a tonne, he noted.
"The CPO also used to track the performance of crude oil prices. But, despite the crash of crude oil price last week, it is good to see that CPO prices remained steady, ” he told Bernama.
For the week just ended, the market was traded mostly lower, tracking the soybean oil market performance, oil prices, the ringgit movement, as well as developments related to COVID-19.
On a Friday-to-Friday basis, the CPO futures contract for May 2020 fell RM164 to RM2,121 a tonne, June 2020 was RM163 lower at RM2,088 a tonne, July 2020 slipped RM160 to RM2,075 a tonne, and August 2020 shed RM149 to RM2,075 a tonne.
Weekly turnover rose to 337,648 lots from last Friday's 230,788 lots, while open interest increased to 251,148 contracts from 248,527 contracts.
On the physical market, the CPO price for April South was RM148 lower at RM2,126 a tonne. - Bernama