CPO futures to trade on upside bias next week on expectation of weaker output

KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to trade on an upside bias next week in anticipation of weaker output.

Palm Oil Analytics (Fastmarkets) managing director Dr Sathia Varqa said market participants will be focused on the Malaysian Palm Oil Board November data which will come out on Tuesday next week to gauge the market direction.

"Expectation is for a reduction in production to keep stocks unchanged. The focus will also be on the export data for Dec 1 to 10,” he said.

Palm oil trader David Ng said the market is expected to trade on a positive note given the expectation that output may decline due to the rainy season.

"Friday’s rally on the soybean oil market is expected to continue next week and this could further lend support for the palm oil prices. The price movement of palm oil is affected by rival oils as they compete for a share of the global vegetable oils market.

"However, next week’s upside may be capped by a weak export trend heading into the year-end. As such, we see support at RM3,650 per tonne and resistance at RM3,800 per tonne next week,” he told Bernama.

For the week just ended, the local CPO market traded mixed in tandem with the regional commodity market, soybean oil prices on the Chicago Board of Trade, and fluctuations in crude oil prices.

On a weekly basis, December 2023 was down RM133 to RM3,600 per tonne, January 2024 declined RM136 to RM3,689 per tonne, and February 2024 erased RM134 to RM3,740 per tonne.

March 2024 slipped RM128 to RM3,769 per tonne while April 2024 and May 2024 fell RM125 each to RM3,770 per tonne and RM3,753 per tonne, respectively.

Total weekly volume increased to 308,072 lots from 238,255 lots in the preceding week while open interest expanded to 214,153 contracts from 208,661 contracts previously.

The physical CPO price for December South eased to RM3,670 per tonne on Friday from RM3,750 per tonne a week earlier. - Bernama

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