CPO futures expected to trade lower next week

KUALA LUMPUR: Crude palm oil (CPO) futures on Bursa Malaysia Derivatives are expected to trade with a downward bias next week as concerns over production and high inventories will weigh on sentiment. investors, said a trader.

Interband Group of Companies senior palm oil trader Jim Teh said the market is likely to see some profit-taking next week after a previous week’s rally climbing around 11% per week, following gains rival edible oils and on the back of a weakening ringgit against the US dollar.

He said the October harvest report is likely to be bearish as production is expected to rise further in the month, leading to higher Malaysian palm oil stocks in October.

On the production front, UOB Kay Hian had estimated Malaysia’s palm oil production in October to be 2-6% higher than September, while exports were between 1.43 and 1. 48 million tons.

“CPO prices are expected to trade between RM3,400 and 3,500 per tonne,” he told Bernama.

Meanwhile, Singapore-based owner and co-founder of Palm Oil Analytics, Dr. Sathia Varqa, said next week’s trading will focus on October harvest data from the Malaysian Palm Oil Board (MPOB). ) and the United States Department of Agriculture (USDA) in November for clues about the direction of the market.

“Most bearish factors are priced in. Traders will watch for surprises in the data,” he added.

In the past week, CPO futures rallied on Russia’s withdrawal from the Ukraine Grain Corridor deal, which caused a bullish spike in the CPO futures contract. Chicago Board of Trade (CBOT) soybean oil, a rise in crude oil prices as well as a weakening of the ringgit against the US dollar. .

On a weekly basis, CPO futures for the spot month of November 2022 rose RM356 to RM4,182 per tonne, December 2022 gained RM347 to RM4,274 per tonne and January 2023 was RM378 higher. at RM4,367 per ton.

February 2023 increased by RM386 to RM4,409 per ton, March 2023 jumped by RM380 to RM4,402 per ton and April 2023 advanced from RM378 to RM4,370 per ton.

Total weekly volume rose to 347,343 lots from 320,719 lots the previous week, while open interest narrowed to 199,305 lots from 202,988 contracts at the end of last week.

The CPO physical price for October South added RM300 to RM4,200 per ton. – Bernama

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