Palm Oil Magazine - CPO Futures Near RM4,000 and Projected to Sustain Uptrend

PALMOILMAGAZINE, KUALA LUMPUR – On Wednesday (24/01), the crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives concluded near the RM4,000 mark and is poised to sustain its positive trajectory in the near term.

According to Bernama, persistent expectations of a significant decline in Malaysian output, coupled with robust soybean prices and an optimistic outlook for oil prices, continue to drive demand.

Oil prices experienced an increase on Wednesday, primarily influenced by rising demand in the United States (US), the world’s largest oil consumer, and a weakened US dollar, as reported by Anadolu. The American Petroleum Institute’s data revealed a larger-than-anticipated decrease in crude oil inventories in the US, alleviating concerns in the market regarding falling demand.

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Crude stocks in the country dropped by 6.67 million barrels last week, surpassing expectations for a 3 million-barrel draw.

Market players now await official data from the US Energy Information Administration, due later in the day, said the news report.

Palm oil trader David Ng told Bernama that the benchmark CPO contract hit RM4,000 per tonne, last seen in November last year, but eventually closed below the level.

“We expect this positive momentum to extend with anticipation that output continues to be weak, which will likely reduce the overall stock level in the country. We expect prices next week to be between RM3,880 and RM4,080 per tonne,” he told Bernama.

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Mumbai-based Sunvin Group commodity research head Anilkumar Bagani said UOB Kay Hian estimated Malaysian palm oil production during Jan 1-20 period to be down by 10-14 per cent from Dec 1-20. amid seasonal low production months.

Now the market is waiting for the Jan 1-20 Malaysian palm oil production data from the Southern Peninsula Palm Oil Millers Association (SPPOMA) and the Malaysian Palm Oil Association (MPOA), he said.

Meanwhile, he said, an early data analysis indicates that Indonesian palm oil export tax and levies may rise for the Feb 1-15 period and this would support the Malaysian palm oil prices if it materialises.

Previously, he also predicted an improved demand outlook ahead of the festive months.

At the close, the spot month February 2024 contract rose RM34 to RM3,997 a tonne, March 2024 bagged RM43 to RM4,003 a tonne, and April 2024 added RM46 to RM3,994 a tonne.

May 2024 gained RM45 to RM3,955 a tonne, June 2024 was RM51 higher at RM3,899 per tonne, and July 2024 increased RM54 to RM3,839 a tonne.

The volume widened to 64,748 lots from 60,483 on Tuesday but open interest decreased to 209,735 contracts from 210,359 contracts previously.

The physical CPO price for February South rose RM50 to RM4,030 per tonne.

The market will be closed tomorrow in conjunction with the Thaipusam celebration and will resume operations on Friday.

Market:

BMD mkt close (24/1/2024, 18:00PM)

Feb 3996 +33

Mar 4004 +44

Apr 3992 +44

(Hi 3998 Lo 3937)

May 3952 +42

Ttl vol 64,748