CPO futures to trade within RM4,000 to RM4,500 range
Improving macro sentiments, mainly from China, which has indicated a relatively liberal to the Covid-19 situation also helped
Anilkumar Bagani
KUALA LUMPUR: Crude palm oil (CPO) futures contracts on Bursa Malaysia Derivatives are expected to trade within a range of RM4,000 to RM4,500 per tonne.
Mumbai-based Sunvin Group’s commodity research head Anilkumar Bagani said Malaysian palm oil futures remained supportive thanks to its wider discount over the competing soy oil and sunflower oil.
“Improving macro sentiments, mainly from China, which has indicated a relatively liberal to the Covid-19 situation also helped,” he told Bernama.
Additionally, he said the increase in Indonesian palm oil export taxes and resumption of export levies starting from Nov 16 are also bullish for the domestic market.
“The higher Indonesian palm oil export taxes are going to support Malaysian palm oil export more.
“The palm oil export from Malaysia continued to stay strong while production is likely topping out seasonally,” he said.
Indonesia is planning to set the palm oil reference price for Nov 16- Nov 20 period at US$826.58, up from US$770.88 per tonne for Nov 1-Nov 15, thus, crossing the threshold of US$800 per tonne and resulting in the resumption of export levies for CPO and crude palm kernel oil (CPKO) to US$85 and for biodiesel at US$55.
Concurrently, the export tax will also move up for CPO to US$33 from US$18 and for CPKO to US$49 from US$21.
At home, Intertek Testing Services (ITS) projected a 65 per cent surge in export figures for the first five days of November to 256,028 tonnes from 155,170 tonnes in the same period of October with traders’ focus turning to the
10 days’ figures to be released soon.
For the week just ended, CPO futures were mostly lower on China demand worries after the country reiterated its commitment to continue with zero Covid-19 measures to tame rising cases.
Volatility in the energy market was also a hurdle for palm oil price movement with winter kicking in at key palm oil export destinations -- India, the European Union, China and Pakistan.
On a weekly basis, CPO futures for the spot month of November 2022 rose RM5 to RM4,187 a tonne but December 2022 eased RM81 to RM4,193 a tonne and January 2023 was RM80 lower at RM4,287 a tonne.
February 2023 decreased RM85 to RM4,324 a tonne, March 2023 lost RM72 to RM4,330 a tonne and April 2023 reduced RM60 to RM4,310 a tonne.
Total weekly volume decreased to 332,293 lots from 347,343 lots in the previous week while open interest narrowed to 199,122 lots from 199,305 contracts at the end of last week.
The physical CPO price for November South, however, added RM20 to RM4,220 per tonne.