KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is likely to trade in a cautious mode next week as traders are expected to remain on the sidelines due to concerns over the stock level, a dealer said.
Interband Group of Companies senior palm oil trader Jim Teh said traders would be watching closely the announcement on the palm oil stock level for May, which is scheduled to be released on June 10.
"The stockpile (level) was expected to be high in May, while demand was expected to lower due to the post Hari Raya holiday. Demand from Pakistan and India was also expected to reduce,” he told Bernama.
He said the commodity price would range between RM2,200-RM2,300 per tonne next week.
Meanwhile, Singapore-based Palm Oil Analytics owner and co-founder Dr Sathia Varqa said Malaysia could expect higher CPO exports moving forward to countries like India and Pakistan after receiving a boost on Friday.
"Malaysian CPO export prices will have a competitive advantage over Indonesia’s. However, the strengthening rInggit may cut the competitive advantage,” she said.
On Friday, Prime Minister Tan Sri Muhyiddin Yassin announced a 100 per cent exemption on export duty on CPO, crude palm kernel oil and processed palm kernel oil from July 1, 2020 to Dec 31, 2020 to boost the commodity sector.
"For the agriculture and food industry, RM350 million will be allocated to the Agrofood Fund loan facility to ensure the sustainability of agricultural and commodity entrepreneurs in the sector,” he said when announcing the National Economic Recovery Plan (PENJANA).
The local market will be closed on Monday in conjunction with the official birthday of the Yang di-Pertuan Agong.
For the week just ended, the market was traded mostly higher on stronger demand due to better crude oil prices and the expectation of higher exports due to tax exemption announced by the Prime Minister.
On a Friday-to-Friday basis, the CPO futures contract for June 2020 improved RM32 to RM2,405 per tonne, July 2020 increased RM53 to RM2,374 per tonne, August 2020 gained RM56 to RM2,348 per tonne, and September 2020 rose RM52 to RM2,341 per tonne.
Weekly turnover surged to 312,697 lots from last Friday’s 154,634 lots while open interest increased to 266,507 contracts from 250,651 contracts.
On the physical market, the CPO price for June South was RM76 higher at RM2,378 per tonne. - Bernama