Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives are expected to be rangebound next week on cautious sentiment and amid concerns over surplus stock, dealers said.
Jim Teh, senior palm oil trader of Interband Group of Companies said prices are expected to move further down, hovering between RM2,600 and RM2,700 per tonne.
“Volume and demand is expected to be small,” he told Bernama today, adding, hedge funds would remain on the sidelines adopting a wait-and-see approach.
However, he said prices would still be profitable, as cost only amounted to between RM1,200 and RM1,500 per tonne.
On external factors, he said the market would be influenced by concerns that demand will lose steam after India, the world’s third-largest edible oil importer, ends its festive season this month, coupled with expectations of high stock due to good production.
Meanwhile, concerns over the global recession and risk aversion are expected to ease off on optimism over Europe’s efforts to support its financial sector.
This follows the European Central Bank’s measures, namely to provide a 12- month long unlimited emergency liquidity to euro zone banks, to allocate a special ?40 billion (?1 = RM4.24) programme to buy distressed covered bonds banks and finally to leave interest rates unchanged at 1.5 percent, said Affin Investment Bank Head of Retail Research, Dr Nazri Khan.
Cargo surveyors Intertek Testing Services and Societe Generale are also due to issue their export data on Monday.
For the week just-ended, the market was on a downward trend as short selling emerged in the middle of the week.
On a Friday-to-Friday basis, September 2011 slumped RM142 to RM2,786 per tonne, October 2011 decreased RM126 to RM2,778, November 2011 fell RM133 to RM2,772 and December 2011 eased RM118 to RM2,777.
Turnover rose to 164,498 lots from 138,763 lots last week while open interest amounted to 139,108 contracts from 131,241 contracts previously.
On the physical market, October South was lower at RM2,800 per tonne from RM2,800. — Bernama