CPO futures poised for technical correction next week

KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is likely to experience a technical correction next week following the speculative play by syndicates, Interband Group of Companies senior palm oil trader Jim Teh said.

He told Bernama that the syndicates were pushing up the CPO prices "like nobody’s business.”

"They are taking advantage. There is plenty of palm oil in Malaysia and Indonesia, and looking at the Malaysian Palm Oil Board website, Malaysia has at least 1.7 million metric tonnes and Indonesia 3.5 million metric tonnes in the month of September.

"Prices of condensed milk have gone up so badly, jumping from RM2.60 to RM3.20 per tin. There is no reason for prices to be so high, as there is plenty of palm oil in Malaysia and Indonesia every month,” Teh said.

According to him, everything that goes up will have to come down so the bubble is going to burst at any time.

"CPO prices cannot always stay high because it will cause food prices to go up,” he said, adding that high CPO prices could only benefit 300 smallholders but many more people would suffer from it.

He said the price was expected to hover between RM4,500 and RM4,600 per tonne.

Meanwhile, palm oil trader David Ng said he expected the CPO prices to trade higher, within the range of RM4,700 to RM5,100 per tonne, amid concerns over weaker output in the near term.

On Wednesday, local CPO futures rallied to a new all-time high of RM5,071 per tonne for the January 2022 benchmark contract due to concerns over weak production in the coming weeks as well as solid gains in soybean oil on the Chicago Board of Trade and the crude oil market.

For the holiday-shortened week, Malaysian CPO futures initially finished higher on concerns over weak production but closed lower towards the end of the week as Chinese authorities clamped down on speculative investment activities.

On a Friday-to-Friday basis, November 2021 increased RM89 to RM5,188 a tonne, and December 2021 gained RM75 to RM5,036 a tonne.

January 2022 was RM65 higher at RM4,924 a tonne, February 2022 rose RM57 to RM4,825 a tonne, and March 2022 climbed RM52 to RM4,716 a tonne.

Weekly volume declined to 278,736 lots from 318,865 lots in the previous trading week, while open interest grew to 260,656 contracts from 259,341 contracts previously.

The physical CPO price for November South was RM70 higher at RM5,230 a tonne. - Bernama