KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is likely to move higher next week, underpinned by the improving export data.
Singapore-based Palm Oil Analytics’ owner and co-founder Dr Sathia Varqa said this was based on the Southern Peninsula Palm Oil Millers’ Association’s (SPPOMA) data, which showed the Sept 1-10 production growth of 7.81 per cent was a slower rise than Sept 1-5’s 14.18 per cent.
“For next week, among the key data to watch out are the United States Department of Agriculture’s September data,” he told Bernama.
Sathia also noted that markets would have a shortened trading week next week, as they would be closed on Sept 16 due to the Malaysia Day public holiday.
Meanwhile, Interband Group of Companies senior palm oil trader Jim Teh said the CPO futures market may trade lower within the range of RM2,600 to RM2,700 per tonne next week due to slower demand while tracking the crude oil markets.
He said demand from main importers like China, India and Pakistan was expected to ease due to slower stockpiling activities.
“Besides, most plantation stocks in the equity market are showing a downtrend, which we believe is the time for profit-taking especially by retail investors, given that the stock market provides faster gains from fixed deposits.
“Overall, the palm oil market has been performing well against other commodities, although the sector is facing a labour shortage issue currently,” he told Bernama.
On another note, Kenanga Research projected that CPO production in September to increase 4.7 per cent month-on-month (m-o-m) to 1.95 million tonnes as the industry entered peak production months.
It also forecast higher exports to 1.63 million tonnes, up 3.1 per cent m-o-m, ahead of the Mid-Autumn and Deepavali festive seasons.
“All in, we expect the total supply of 2.0 million tonnes to outstrip total demand of 1.95 million tonnes, leading to higher ending stocks of 1.74 million tonnes or 2.6 per cent higher m-o-m,” it said in a note.
For the week just ended, the CPO futures contract traded mostly lower, tracking the movement of bean oil prices on the Chicago Board of Trade and Dalian Commodity Exchange, and the movements of crude oil as well the ringgit against the US dollar.
On a Friday-to-Friday basis, the CPO futures contract for September 2020 declined RM52 to RM2,880 per tonne, October 2020 eased RM31 to RM2,861 per tonne, November 2020 fell RM24 to RM2,811 per tonne, and December 2020 slipped RM19 to RM2,778 per tonne.
Weekly volume rose to 246,479 lots from 213,212 lots in the previous week, while open interest declined to 233,229 contracts from 238,535 contracts a week earlier.
On the physical market, September South dropped RM30 to RM2,890 per tonne. – Bernama