CPO futures to move higher next week

KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is likely to move higher next week, underpinned by the improving export data.

Singapore-based Palm Oil Analytics’ owner and co-founder Dr Sathia Varqa said this was based on the cargo surveyor Intertek Testing Services data, which showed Malaysia's exports for the May 1-10 period up by 29.63 per cent to 447,225 tonnes from 345,010 tonnes in the same period in April 2021.

Similarly, cargo surveyor Amspec Malaysia stated that exports in the May 1-10 period rose 36.85 per cent to 469,875 tonnes from 343,356 tonnes in April 2021.

"Trading next week will be based on May 1-15 Malaysia export data which is expected to be higher but at a slower pace than May 1-10 data,” he told Bernama.

Meanwhile, palm oil trader David Ng opined that CPO futures is expected to still trade on upward bias given the strong performance in the Chicago bean oil market.

On another note, Kenanga Research projected May’s production growth to increase by 4.6 per cent month-on-month (m-o-m), as Sabah and Sarawak continued their growth trajectory and exports to rise by 19.6 per cent m-o-m ahead of the Hari Raya Aidilfitri festive season and potential stockpiling activities from China and India.

"We expect total demand to outstrip total supply, leading to lower ending stocks of 1.46 million tonnes equivalent to 5.6 per cent m-o-m drop," it said.

CPO was traded for only three days during the holiday-shortened week, in conjunction with the Hari Raya Aidilfitri celebration.

Bursa Malaysia and its subsidiaries were closed from noon onwards on Wednesday, May 12 until May 16, and trading will resume on Monday, May 17.

On a weekly basis, the CPO futures contracts were mostly higher, with only May 2021 declining RM83 to RM4,800 per tonne, June 2021 rose RM71 to RM4,749, July 2021 firmed RM79 to RM4,506 per tonne and August 2021 improved RM68 to RM4,285 per tonne.

With just three-day trading, weekly volume drop to 156,560 lots from 281,343 lots in the previous week, while open interest lost to 228,824 contracts from 277,416 contracts a week earlier.

The physical CPO price for May South was marginally lower by RM10 to RM4,820 per tonne. - Bernama