The Hindu Business Line (08/10/2020) - Crude palm oil (CPO) prices have been on a decline in the spot market for the past 15 days. According to MCX data, the price of CPO, which was at ₹811.30 for a 10-kg unit in the spot market on September 21, came down to ₹777.90 on October 1, and traded at ₹773.30 on October 7.
However, analysts are of the opinion that the prices may look up in the coming few weeks, with the festival season set to begin, and the removal of restrictions in ‘sit-and-dine’ restaurants is likely to limit thw major fall in the prices of palm oil.
The MCX October month futures contract in CPO, which closed at ₹764.10 for a 10 kg unit on October 7, was trading at ₹771.10 at 6.00 pm on October 8.
Vinod TP, Senior Analyst at Geojit Financial Services Ltd, said: “October CPO futures on the MCX is tracking benchmark BMD Malaysian palm oil prices, which have been moving lower on demand with increasing spread of Covid-19 in European countries, where movement restrictions are being re-imposed again.”
Subhranil Dey, Senior Research Analyst (Commodities-Fundamental), SMC Comtrade Ltd, said that palm oil prices have also nosedived because of sharp declines in soya oil on the CBOT amid sped- up harvesting of US soyabean, and also due to concerns over the rising output of Malaysian palm oil. Additionally, the strong outlook for dollar also took its toll on the commodity.
Dey added: “As the plantations in Indonesia and Malaysia have entered the seasonal peak production period, in days to come we would be receiving news of higher output of palm oil from these countries”.
Quoting a Reuters poll, Dey said Malaysian palm oil inventories in September were seen rising 1.27 per cent from the previous month to 1.72 million tonnes, their highest since July. The world’s second-largest producer of palm, Malaysia, is likely to report a 4.85 per cent increase in its output to 1.95 million tonnes, the highest since October 2018, while exports may have risen by 6.19 per cent to 1.68 million tonnes. The factor to watch out for in the coming weeks is the exports of palm oil to major consumers such as India and China, he dded.
“As regards the price outlook, we may see a lower side of 2,600-2,500 Malaysian ringgit/tonne on the BMD and ₹720-700 on the MCX,” said the SMC analyst.
Read more at https://www.thehindubusinessline.com/markets/commodities/crude-palm-oil-on-a-downward-trend-in-spot-market/article32805845.ece