CPO FUTURES END HIGHER OVER CONCERNS ABOUT WEAKER PALM OIL PRODUCTION

By Durratul Ain Ahmad Fuad

KUALA LUMPUR, July 1 (Bernama) -- The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives ended higher today on the prospect of weaker-than-expected palm oil output, said palm oil trader David Ng. 

He said stronger soybean oil prices at the Chicago Board of Trade (CBOT) also lifted market sentiment.

“We see price support level at RM3,900 per tonne and resistance at RM4,050 per tonne,” he told Bernama.

Elaborating further on the prospect of weaker-than-expected output, Ng said South Palm Oil Manufacturer Association’s (SPPOMA) June 1-30 data showed production decreasing 5.1 per cent on a month-on-month basis. 

“Estimates are pointing to lower production despite seasonally higher production period. 

“Lower production will likely cause a lower stockpile in the country, which is bullish for prices,” he said. 

Meanwhile, Mumbai-based Sunvin Group commodity research head Anilkumar Bagani said CPO futures closed higher today following gains in Chinese vegetable oil futures and CBOT soybean oil futures in Asian hours.

“Malaysian palm oil export for June 2024 estimated by Intertek Testing Services (ITS) at 1.307 million tonnes, down by 11.82 per cent from its May estimate of 1.482 million tonnes.

“The market is now waiting for full-month production estimates by UOB Kay Hian and the Malaysian Palm Oil Association,” he said. 

Fastmarkets senior analyst Sathia Varqa said robust gains in related vegetable oils futures on the Chinese exchanges, particularly palm olein on Dalian, plus a strong close on rapeseed oil futures on the Zhengzhou exchange spilt over to push palm higher.

“Lower production data from SPPOMA showing June output down by 5.10 per cent sustained the buying momentum. Traders set aside the poor export data to track the gains in related vegetable oils on Dalian,” he said. 

At the close, the spot month July 2024 contract added RM48 to RM4,024 a tonne, August 2024 gained RM66 to RM3,998 a tonne, September 2024 expanded RM63 to RM3,979 a tonne, October 2024 contract increased by RM60 to RM3,965 a tonne, November 2024 climbed RM56 to RM3,959 a tonne, and December 2024 was up by RM52 at RM3,963 a tonne.

Total trading volume weakened to 59,294 lots from Friday’s 64,244 lots, while open interest improved to 210,848 contracts from the previous 203,691 contracts.

The physical CPO price for July South was RM50 higher at RM4,050 per tonne.

-- BERNAMA