KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to continue its upward momentum next week on higher export and weaker production expectations.
Palm oil trader David Ng said anticipation of a weaker than expected output despite a peak production period is causing anxiety among market participants while higher demand from India and China owing to restocking activities would continue to boost exports.
Malaysian CPO futures prices would also likely move in tandem with the movement on the Chicago Board of Trade (CBOT) and Dalian Commodity Exchange’s soybean futures as they compete for a share in the global vegetable oils market.
"The CPO futures contract will likely trade between RM4,100 and RM4,300 a tonne next week,” he told Bernama.
Coversely, Interband Group of Companies senior palm oil trader Jim Teh opined that for the four-day trading week the market would likely trade with a slight downward bias on profit-taking.
"The prices had moved up very high compared to average production cost of about RM1,800 a tonne, mainly on speculative play.
"We expected to see some selling for the holiday-shortened week pinned on high inventory level in major producing countries,” he said.
For the week just ended, Malaysian CPO futures ended lower on Monday but stayed higher for the rest of the week with traders’ decision continued to be driven by the export and production data.
On a weekly basis, August 2021 rose RM360 to RM4,300 a tonne, September 2021 added RM324 to RM4,216 a tonne, October 2021 firmed RM325 to RM4,137 a tonne and November 2021 gained RM329 to RM4,069 a tonne.
July 2021 contract ended on Thursday at RM4,149 a tonne.
Weekly volume advanced to 346,774 from 312,159 lots in the previous trading week, while open interest improved to 264,682 contracts versus 247,219 contracts previously.
The physical CPO price for July South advanced RM131 to RM4,360 a tonne on Friday. - Bernama