CPO futures likely to see technical correction next week


KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is likely to experience a technical correction ahead of the mid-month exports data.

Singapore-based Palm Oil Analytics owner and co-founder Dr Sathia Varqa said the technical correction was expected to be triggered by higher exports.

"Next week’s trading is expected to be in line with cargo surveyors’ export data,” he told Bernama.

Meanwhile, palm oil trader David Ng forecast CPO futures to trade in a sideways market with downward bias.

"It is due to the recent increase in production which may weigh on prices going forward. It is likely production may continue to rise in the month of September,” he said.

Ng located support at RM4,100 per tonne and resistance at RM4,350 per tonne.

Earlier this week, the Malaysian Palm Oil Board (MPOB) said CPO prices were expected to be stable at above RM4,000 per tonne for the third quarter of 2021 before weakening in the fourth quarter due to the expected recovery in production.

According to MPOB director general Dr Ahmad Parveez Ghulam Kadir, improvements in production and exports are expected to sustain in the following year, supported by positive developments in the COVID-19 situation, better prospects for global oils and fats, as well as favourable trade policies in competing and importing countries.

For the week just ended, Malaysian CPO futures saw mostly higher trading, taking the cue from the solid exports data as well as concerns over output.

On a Friday-to-Friday basis, September 2021 gained RM24 to RM4,574 a tonne, October 2021 decreased RM16 to RM4,413 a tonne, November 2021 fell RM32 to RM4,278 a tonne, and December 2021 was RM27 lower at RM4,184 a tonne.

Meanwhile January 2022 lost RM16 to RM4,109 a tonne and February 2022 shed RM11 to RM4,031 a tonne.

Weekly volume expanded to 286,662 lots from 235,714 lots in the previous trading week, while open interest declined to 254,743 contracts versus 256,759 contracts previously.

The physical CPO price for September South added RM20 to RM4,600 a tonne on Friday. - Bernama

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