Stocks, exports data to set direction for CPO futures next week

KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is set to trade in cautious mode next week as investors await further clarity from the latest stocks and exports data.

Mumbai-based Sunvin Group commodity research head Anilkumar Bagani said the market is closely watching for reliable Malaysian Palm Oil Association’s production estimates to reinforce production ideas.

The Malaysian Palm Oil Board will also be releasing the industry performance report for September 2023 on Tuesday (Oct 10).

Anilkumar said a recent indication by UOB Kay Hian showed that Malaysian palm oil production climbed five to nine per cent month-on-month last month, higher than prior market estimates of a two to five per cent increase.

For the first five days of October, Intertek Testing Services estimated Malaysian palm oil exports during the said period at 159,820 tonnes, declining by 15.57 per cent from the 189,285 tonnes projected for the Sep 1-5 period.

For the week just ended, CPO futures were traded lower as investors assessed various supply and demand indicators for last month and the early part of October, including the movement of the soybean oil futures market movement and crude oil prices.

News about the government’s plan to expand the B10 biodiesel programme and its proposal to reduce the windfall levy did encourage some buying during mid-week before the market retreated on demand worries.

On Friday, the benchmark for CPO futures fell to more than a three-month low.

On a weekly basis, the October 2023 contract lost RM127 to RM3,562 per tonne, November 2023 weakened by RM159 to RM3,573 per tonne, and December 2023 dipped RM167 to RM3,600 per tonne.

January 2024 decreased RM162 to RM3,636 per tonne, February 2024 was RM153 easier at RM3,672 per tonne and March 2024 declined RM150 to RM3,692 per tonne.

Total weekly volume, however, widened to 293,575 lots from 264,271 lots in the preceding week, while open interest strengthened to 293,575 contracts from 221,984 contracts previously.

The physical CPO price for October South was reduced by RM120 to RM3,600 per tonne from RM3,720 per tonne in the previous week. – BK