CPO futures fall for third consecutive day on worries over rising production, stockpiles
10/11/2022 (The Edge Markets), Kuala Lumpur - Crude palm oil (CPO) futures contracts on Bursa Malaysia Derivatives closed lower on Thursday for the third consecutive day on worries over higher production and stockpiles of the commodity.
According to the Malaysian Palm Oil Board (MPOB) report released on Thursday, CPO stockpiles rose 2.63% to 1.31 million tonnes in October 2022 from 1.28 million tonnes in September.
CPO output was 2.44% higher at 1.81 million tonnes versus 1.77 million tonnes in the same period.
However, palm oil exports expanded 5.66% month-on-month (m-o-m) to 1.5 million tonnes in October against 1.42 million tonnes.
Anilkumar Bagani, the Mumbai-based Sunvin Group commodity research head, said although the stockpiles were still higher on a month-on-month and year-on-year basis, it was slightly bullish on the report in view of palm oil's extraordinary discount over competing oils and the sound export pace.
"Further, the Indonesian palm oil export levies are expected to kick in from Nov 16 onwards if the reference price goes above US$800 per tonne, and that will close the gap between Malaysian and Indonesian palm oil offerings, and the market will be in sync.
"However, there are some issues with the weakness in soy oil prices as the market is expecting another foreign exchange policy change from Argentina and also concerns about the Covid-19 situation in China," he told Bernama.
He said energy prices were also a hurdle for palm oil price growth with winter kicking in at key palm oil export destinations India, the European Union, China, and Pakistan.
At the close, contracts for November 2022 and December 2023 went down RM36 each to RM4,109 and RM4,115 a tonne respectively, while January 2023 declined RM20 to RM4,178.
The February 2023 contract eased RM21 to RM4,198, March 2023 declined RM18 to RM4,194, and April 2023 discounted RM24 to RM4,167 a tonne.
Total volume fell to 71,340 lots from 78,733 lots on Wednesday while open interest decreased to 199,553 contracts from 275,025 contracts previously.
The physical CPO price for November South fell RM100 to RM4,080 a tonne