26/07/2013 (Bernama) - The historical high of 251,994 contracts recorded on Bursa Malaysia Derivatives on Thursday was due to traders going on a selling spree with the view of buying back at lower prices.

"Traders short the futures market yesterday on overall sluggish sentiment," said analysts.

The slide was more pronounced on the crude palm oil (CPO) futures contract, Klibor futures contract and the FBM KLCI futures contract which are the most actively traded futures products on the derivatives market.

Meanwhile, the open interest for crude palm oil futures also registered a historical high of 201,209 contracts.

Open interest reflects hedgers' collective position in the futures exchange, taken against their other exposure and positions in the physical markets and is critical to the success of a futures contract.

Philip Futures Sdn Bhd Derivatives Product Specialist David Ng said bearish sentiment geared up after demand conditions in the market remained feeble.

"Traders are holding up positions overnight to position on the bearish trend.

"After prices broke through the key psychological level of RM2,200 per tonne, sentiment turned easier where prices broke major resistance," he told Bernama.

Another dealer, Chan Chee Wei of Kenanga Deutsche Futures said all-round investors estimated the market to be bearish and this would hurt CPO prices further.

"Despite the backdrop of current high production and potentially higher CPO inventories, lower prices should cushion the impact as it would be attractive for buyers to accumulate at the lower levels," he added.

Meanwhile, Interband Group of Companies Senior Trader Jim Teh said the bearish sentiment for CPO was also reflected in other commodity markets, such as its closest substitute and competitor, soybean oil.

He said CPO prices would be testing the RM2,000 to RM2,100 per tonne level next week.

"These prices will still be attractive for planters," he added.