CPO futures to trade lower next week on weaker exports

KUALA LUMPUR: The crude palm oil (CPO) futures on Bursa Malaysia Derivatives is expected to trade lower on the new benchmark month, April 2022, next week due to export weakness, dealers said.

Singapore-based Palm Oil Analytics owner and co-founder Sathia Varqa said the expected profit-taking and market talk of lower mid-January exports are likely to weigh down on CPO futures.

"Palm trading market is also still clinging on to the idea of lower production due to floods in Peninsular Malaysia but production is expected to rebound as floods subside,” he told Bernama.

Echoing similar sentiments, Mumbai-based Sunvin Group commodity research head Anilkumar Bagani said the market is likely to trade lower next week as the first half of January 2022 palm oil export performance is bad, while the Malaysian weather is turning normal.

"The uncompetitive palm oil price over soft oils is the major deal breaker for palm oil at the key destination markets and it will have to correct lower to regain buying interest,” he said.

As such, he said, the new benchmark April 2022 futures are expected to trade lower towards RM4,750 to RM4,660 per tonne with resistance at RM5,020 to RM5,070 per tonne.

For the week just ended, Malaysian CPO futures finished mostly higher on concern of weaker output.

On Monday, the Malaysian Palm Oil Board's (MPOB) data showed that CPO stocks for December 2021 fell 11.89 per cent to 830,339 tonnes from 942,354 tonnes in the previous month on lower production and exports.

Total palm oil stocks for December slipped by 12.88 per cent to 1.58 million tonnes from 1.82 million tonnes in the preceding month.

Meanwhile, palm oil exports was down by 3.48 per cent to 1.41 million tonnes in December versus 1.47 million tonnes in November.

The board also expects CPO price to average at RM3,800 per tonne in 2022 on improved palm oil production, in line with the performance of other major vegetable oils prices amid the recovery in production and stock.

It also foresees exports to increase 9.3 per cent to 17 million tonnes this year from 15.56 million tonnes previously.

On a Friday-to-Friday basis, January 2022 fell by RM30 to RM5,300 a tonne, February 2022 gained RM50 to RM5,276 a tonne, March 2022 added RM130 to RM5,123 a tonne and April 2022 improved by RM158 to RM4,956 a tonne.

Meanwhile, May 2022 rose RM149 to RM4,788 a tonne and June 2022 widened by RM134 to RM4,646 a tonne.

Weekly volume edged up to 299,760 lots from 258,300 lots last week, while open interest increased to 268,508 contracts from 252,640 contracts previously.

The physical CPO price for January South fell by RM30 to RM5,350 a tonne. - Bernama