CPO futures to trade with upward bias on weak output

KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is likely to trade with an upward bias due to weak output, which may lower the overall stock level in the country.

Palm oil trader David Ng expects the futures prices to trade between RM3,750 and RM3,900 per tonne.

“There is lingering concern in the market about the production level in the country; a lower output would be supportive of prices,” he told Bernama.

Palm Oil Analytics (Fastmarkets) managing director Sathia Varqa added that soybean oil prices descended at a faster pace to olein since midJanuary, erasing palm discount to soybean oil, thus losing its competitiveness and market share.

“Palm prices responded to this by falling rapidly to recapture the discount,” he added.

He also projected that Malaysia’s January export of the commodity to fall to between seven per cent and 10 per cent compared with that in December.

For the week just ended, CPO futures traded mostly lower in sync with the performance of other vegetable oils and the decline was partly due to mild profit-taking.

The CPO futures contract for April 2024 sank to a three-week low for the aforementioned reason.

On a weekly basis, the spot month February 2024 contract erased RM231 to RM3,788 a tonne, March 2024 fell RM235 to RM3,794 a tonne and April 2024 went down RM253 to RM3,764 a tonne.

May 2024 decreased RM248 to RM3,721 a tonne, June 2024 slid RM230 to RM3,677 a tonne and July 2024 slipped RM202 to RM3,641 a tonne.

The total weekly volume however rose to 297,272 lots from 234,510 lots in the previous week despite the holiday-shortened trading week as the market was closed on Thursday due to Federal Territory holiday.

Open interest fell to 208,948 contracts from 214,451 contracts previously.

The physical CPO price for February South stood at RM3,860 per tonne, down RM190 from RM4,050 per tonne last week. — Bernama