CPO futures to trade on a slightly upward bias next week

KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to trade on a slightly upward bias on the back of a strong export performance.

In July, palm oil exports rose by 15.6 per cent to 1.35 million tonnes from 1.17 million tonnes previously, while preliminary data by Intertek Testing Services showed exports for Aug 1-10 period increase by 5.88 per cent to 395,145 tonnes.

AmSpec estimates exports at 383,795 tonnes, up 17.52 per cent from July 1-10 period.

Palm oil trader David Ng told Bernama that prices may trade between a high of RM3,900 and a low of RM3,600 next week.

Nevertheless, he said worries over stocks may limit price uptrend following the higher production period currently, which is set to only peak in October or early November.

On a positive note, Hong Leong Investment Bank believes the stockpile will likely remain flattish in August amid higher export demand.

It said palm oil’s improved price competitiveness over soybean oil will give a boost to palm oil exports.

At the same time, soybean oil prices are likely to remain higher due to production concerns mainly in top exporting Argentina.

For the week just ended, the CPO futures were traded mostly lower, tracking the soybean oil futures on the Chicago Board of Trade and owing to concerns over rising domestic palm oil inventory.

On a weekly basis, August 2023 fell RM55 to RM3,727 per tonne, September 2023 declined RM123 to RM3,703 per tonne, and October 2023 slid RM142 to RM3,717 per tonne.

November 2023 edged down RM143 to RM3,739 per tonne, while December 2023 and January 2024 dipped RM156 each to RM3,759 per tonne and RM3,792 per tonne respectively.

The total weekly volume widened to 288,950 lots from 272,747 lots in the preceding week and open interest decreased to 198,125 contracts from 262,411 contracts previously.

The physical CPO price for August South declined RM100 to RM3,750 per tonne. – Bernama