CPO futures expected to trade with upward bias next week

KUALA LUMPUR: Crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to trade on an upward bias in view of stronger demand from India and China, said palm oil trader David Ng.

He said the market next week is likely to see higher demand from India and China for palm oil due to seasonal demand.

"We are seeing both India and China increasing their demand for palm oil. For China, it is more of seasonal demand given that winter is coming and they are likely to stock up before winter,” he told Bernama.

Recently, it is reported that China’s government had told families to stockpile daily necessities in case of ”emergencies” and urged local authorities to ensure adequate food supplies for this winter.

In addition, he said according to Intertek Testing Services data, exports of Malaysian palm oil products for Nov 1-Nov 5 improved 11.6 per cent to 262,530 tonnes from 235,250 tonnes shipped during Oct 1-Oct 5.

As such, the price movement next week is expected to hover between RM4,700 and RM5,100 next week, he said.

Interband Group of Companies senior palm oil trader Jim Teh said the market is expected to trend lower next week on profit-taking activities due to closing of year-end account, the holiday season, as well as syndicates, bidding down and slowly taking up very thin volume trading.

Meanwhile Moody’s Investors Service had projected its price sensitivity range for crude palm oil to RM2,800-RM3,200 per tonne next year.

"Since Merdeka, we do not have this kind of prices -- it will affect the agriculture industries,” Teh said.

Hence, he is expecting the price to trade between RM4,000 and RM4,500 next week.

On a Friday-to-Friday basis, November 2021 decreased RM83 to RM5,319 a tonne and December 2021 slipped RM119 to RM5,108 a tonne.

January 2022 lost RM146 at RM4,880 a tonne, February 2022 declined RM170 to RM4,711 a tonne, March 2022 eased RM198 to RM4,557 a tonne and April 2022 was down by RM215 to RM4,417 a tonne.

Weekly volume depreciated to 250,219 lots from 279,164 lots in the previous trading week, while open interest narrowed to 243,221 contracts from 245,276 contracts previously.

The physical CPO price for November South was RM50 lower at RM5,400 a tonne. - Bernama