MARKET DEVELOPMENT
CPO futures end lower on concerns over rising production
CPO futures end lower on concerns over rising production
08.04.2022 (www.theedgemarkets.com) - KUALA LUMPUR (April 7): The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives ended lower on Thursday on concerns over rising production, said a dealer.
Palm oil trader David Ng said the CPO futures also fell in line with the weakness in the Chicago Board of Trade (CBOT) soybean oil market.
“We locate support at RM5,500 a tonne and resistance at RM6,100 a tonne,” he told Bernama.
Mumbai-based Sunvin Group commodity research head Anilkumar Bagani said investors were booking profits on the expectation that demand will slow down as destination markets grapple with deep negative margins due to high palm oil prices.
“Lower prices of Black Sea sunflower oil and the recent correction in crude oil have pressured palm oil prices to retreat to remain competitive,” he said.
Anilkumar added that the Malaysian Palm Oil Association (MPOA) came up with its estimate showing Malaysian palm oil production during March 2022 at 1.35 million tonnes, or about 19 per cent up from February.
“The numbers are at the higher side of market estimates and it would inject further selling pressure as Malaysian palm oil March-end stocks may not fall if the MPOA estimate replicates in the Malaysian Palm Oil Board (MPOB) data,” he said.
At the close on Thursday, the CPO futures contract for April 2022 dropped RM54 to RM6,610 a tonne, May 2022 decreased RM88 to RM6,213 a tonne, June 2022 slipped RM85 to RM5,827 a tonne, and July 2022 fell RM63 to RM5,628 a tonne.
Meanwhile, August 2022 slipped RM32 at RM5,537 a tonne, and September 2022 shed RM41 to RM5,482 a tonne.
Total volume surged to 53,748 lots from Wednesday’s close of 51,750 lots while open interest expanded to 240,630 contracts from 239,537 contracts previously.
The physical CPO price for April South remained unchanged at RM6,650 a tonne.