Traders expect CPO prices to rebound
27 May, 2004 - FALLING crude palm oil (CPO) prices may have found theirbottom and are poised for a rebound in the weeks ahead.
Traders view the market as already being oversold and said that prices areexpected to turn around on a technical rebound, and trade between RM1,580and RM1,650 a tonne.
The market will remain steady unless a major weather disaster breaks out.China is coming into the market again and there has been a lot of rain inthe US, a trader told Business Times yesterday.
CPO prices averaged RM1,500 a tonne last year. It could average aboveRM1,600 a tonne this year, said an analyst.
CPO prices slid almost 14 per cent to RM1,650 a tonne on Tuesday fromRM1,915 on May 5th on news there will be a good harvest of US soyabeans bySeptember this year. This means more soyabean oil will flood the worldmarket.
China, on the other hand, tightened its monetary policies, which includeda squeeze on credit facilities triggering several cancellations insoyabean shipments and the closure of many crusher plants.
Malaysia in turn entered into the traditional high production months ofApril and May coupled with poor exports.
Cargo surveyor Societe Generale de Surveillance (SGS) estimated theMalaysian palm oil exports for the first 20 days of May would be lower at592,272 tonnes, a 12.7 per cent drop from 678,716 tonnes in the sameperiod in April.
CPO prices would continue to be steady as long as India, Europe and Chinacontinue to buy, said a trader.
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