CPO futures likely to see quiet trading next week

KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to see quiet trading next week or retreat on slight profit-taking, with the price to move between RM3,200 and RM3,350 per tonne.

Interband Group of Companies senior palm oil trader Jim Teh said investors would likely be on leave for Chinese New Year as early as Jan 9 and resume trading on Feb 15.

"Most of them would not take oil next week due to the celebration, especially China as they have gotten their stock ahead of the festival, last month,” he told Bernama.

Meanwhile, Singapore-based Palm Oil Analytics owner and co-founder Dr Sathia Varqa said trading is expected to be volatile next week due to a short trading week with more focus on month-end stock for January.

The Malaysian Palm Oil Board will be releasing the data for January 2021 on Feb 10.

Malaysian Palm Oil Association (MPOA) data also showed that CPO production in January 2021 decreased 19.53 per cent compared to December 2020.

In addition, CGS-CIMB expects palm oil supply to recover in the second quarter as weather conditions normalise.

The recent increase in India’s effective import duties on CPO could dampen near-term demand as the country has raised import duty on CPO to 35.75 per cent, effective Feb 2, after revising the import duties and imposing new cess.

For the week just ended, the market was traded mostly mixed tracking India’s revised import tax on CPO, fears on weaker exports and anticipation of lower inventory in the near term.

On a weekly basis, the CPO futures contract for spot month February 2021 fell RM21 to RM3,914 per tonne, March 2021 narrowed RM50 to RM3,629 per tonne, April 2021 shrank RM115 to RM3,375 per tonne, and May 2021 was RM149 lower at RM3,216 per tonne.

Weekly volume decreased to 276,743 lots from 293,917 lots in the previous week, while open interest was down 253,976 contracts from 265,549 contracts a week earlier.

The physical CPO price for February South climbed RM20 to RM3,940 per tonne. - Bernama

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