Crude palm oil (CPO) futures prices on the Malaysia Derivatives Exchange
will likely to be in rangebound trade next week, despite rising
concerns over tight supply, dealers said.
A dealer said the dry
season may continue to curb some production.
HWANGDBS Vickers
Research Sdn Bhd, in its research note said however, the low inventory
level would likely be reversed next month.
“We expect the
stock/usage ratio to reverse itself next month as yields continue to
recover, despite seasonally drier weather starting May,” said the
research house.
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It said exports continued to grow in March, rising 7.7 per cent on a
month-on-month basis, to 1.394 million metric tonnes.
This,
coupled with higher domestic consumption, reduced inventory from 1.789
million metric tonnes to 1.655 million metric tonnes, the lowest in six
months.
Correspondingly, the stock/usage ratio was 9.1 per cent
at end March, it noted.
However, this rising production as well
as expectation that soybean oil prices will continue to decline, is
likely to drag prices down.
“Recent palm oil price movements
confirm our view that lower soybean oil prices will continue to drag
down palm oil prices,” it explained.
Soybean and palm oil prices
always move in tandem as both commodities compete for similar export
destinations.
For next week, the support level would be at
RM2,500 per tonne and immediate resistance at between RM2,550 to RM2,560
per tonne.
CPO prices were mostly lower on trading days during
the week but ended firmer on Friday.
On a Friday-to-Friday basis,
May 2010 declined RM13 to RM2,540, June 2010 lost RM66 to RM2,528 and
July 2010 eased RM12 to RM2,518.
However, total turnover dropped
to 58,345 lots from 82,169 lots last Friday while open interests
declined to 71,486 contracts from 77,683 contracts last week.
On
the physical market, April South declined RM15 to RM2,560 per tonne.
–Bernama
Source : Business Times
