CPO Futures Set to Consolidate

Crude palm oil (CPO) futures on Bursa Malaysia Derivatives is likely to

consolidate next week after having beached a two-year high this week,

dealers said.

The benchmark third-month CPO contract, January 2011 surged RM83 to

RM3,273 per tonne on Monday, a level last seen on July 18, 2008.

CPO prices remained firm throughout the week, except on Friday when

the market retreated on profit-taking and to the downtrend in other

commodities.

“After the recent rally, the CPO market could see choppy trading

next week. The prices, however, would remain above RM3,000 per tonne

amid continuous demand,” a dealer said.


However, another dealer said CPO prices would remain bullish in the near-term, riding on firm soyabean prices.

Other factors supporting the market were weak production, strong

exports, soyabean shortage and unfavourable weather affecting South

American soyabean planting.

“CPO prices have been rallying not because of fundamentals but due

to tightness in the soyabean market due to a production shortfall in

Brazil, a key producer,” the dealer said.

Meanwhile, Indonesia raised palm oil export taxes which


could mean higher palm oil prices in the near term.

On a Friday-to-Friday basis, the November 2010 and December 2010

contracts surged RM157 each to RM3,337 and RM3,349 per tonne,

respectively while January 2011 jumped RM162 to RM3,353 and February

2011 advanced RM156 to RM3,351.

Total volume increased to 130,668 lots from last week’s 62,299 lots

while open interest stood at 74,477 contracts compared with 72,289

contracts previously.

On the physical market, November South was RM160 higher at RM3,360 per tonne from RM3,200 per tonne last week. — Bernama

Source : Business Times

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