17/01/2011 (The Star Online), Kuala Lumpur - Strong overseas demand mainly from China for the approaching Chinese New Year, is expected to further boost the Crude Palm Oil (CPO) futures on Bursa Malaysia Derivatives this week.

This, coupled with a confirmed order of 30,000 tonnes of CPO from Thailand, will be the major catalyst for the price to hit a high RM4,000 per tonne in February and March.

MIDF Research in a note last Friday said the high price may not be enough to dampen demand for the CPO.

It added that continuous demand would further provide a short-term potential upside for the price.

The research house also expects the total CPO export in February to increase between two and five per cent.

A dealer said, cuts in soyoil stock, especially from Argentina, may result in the people relying more on palm oil despite the current high prices.

He believed this scenario would likely support export demand for local CPO in coming months.

Last Friday, the market's trading volume, declined sharply on a technical correction as it had been oversold the previous day.

“The market was a little oversold and went into a correction mode. However, the day's losses were limited on late buying, on concerns over the low production of soyoil and palm oil, due to uncertain weather conditions late last year, mounted,” the dealer explained.

Key data to be released this week might also influence the market's direction.The palm oil export data for the first 15 days of January is due for release today (Monday) by the cargo surveyors.

On a Friday-to-Friday basis, January 2011 perked RM80 to RM3,880 per tonne.

However, February 2011 slipped RM26 to RM3,692, March 2011 dropped RM14 to RM3,680 and April 2011 fell RM12 to RM3,643.

The week's turnover rose to 125,324 lots from 91,906 lots previous week while the open position declined to 87,887 contracts from 90,806 previously.

On the physical market, the January South contract ended the week at RM3,730 per tonne, lower than the RM3,820 recorded previous week.