02.11.2019 (The Star Online) - KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to go through correction next week, but will be well supported at between RM2,350 and RM2,400 per tonne for the CPO benchmark month.
Singapore-based Palm Oil Analytics owner and co-founder Dr Sathia Varqa said after data estimates showed a solid rise in exports in October, attention will now be on the supply side and the subsequent impact on end-month stockpiles.
"October supply and demand estimates from the three main surveyors may sway the market next week, in addition to the United States Department of Agriculture November report, ” he told Bernama.
According to data released by independent inspection company, AmSpec Malaysia, exports of Malaysian palm oil products for Oct 1-31 increased 17.5 per cent to 1.53 million tonnes versus 1.30 million tonnes recorded in September.
Sathia also quoted the plantations experts at the 15th Indonesian Palm Oil Conference and 2020 Price Outlook, who said the outlook for the first half of 2020 remained bullish.
One of the experts, Thomas Mielke of ISTA Mielke GmbH, noted that the palm oil production in Malaysia is set to drop slightly in 2020 from the 20.5 million tonnes recorded in 2019. Indonesia would also experience a slowdown in production growth by 1.8 million tonnes in 2020 to 43.6 million tonnes from 45.4 million tonnes this year.
The lower production and higher demand would push the CPO price to be trading higher at RM2,600 per tonne for the first half next year, according to Bloomberg.
For the public holiday-shortened week, CPO futures were traded mostly higher and even hit its 18-month high following bullish October exports.
On a Friday-to-Friday basis, the CPO futures contract for November 2019 rose RM72 to RM2,381 per tonne, December 2019 increased RM82 to RM2,432 per tonne, January 2020 put on RM64 to RM2,462 per tonne and February 2020 was RM37 higher at RM2,475 per tonne.
Weekly turnover slipped to 238,435 lots from 248,982 lots in the previous week, and open interest narrowed to 253,537 contracts from 299,111 contracts previously.
On the physical market, the CPO price for November South gained RM70 to RM2,380 per tonne. The market was closed on Monday in lieu of the Deepavali public holiday which fell on Sunday. -- BERNAMA
Read more at https://www.thestar.com.my/business/business-news/2019/11/02/palm-oil-to-undergo-correction-trade-tight-range-next-week#EE6V7Yyck7Fdxlic.99