KUALA LUMPUR: High demand for palm oil ahead of the Ramadhan season will lift interest for crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives next week.

Interband Group of Companies Senior Palm Oil Trader Jim Teh said demand for the commodity would mainly come from Middle East countries.

He expected the commodity to fetch between RM2,650 and RM2,700 a tonne next week – a level still lucrative to planters.

Meanwhile, Phillip Futures Sdn Bhd, Derivative Specialist David Ng said trading would be volatile as investors follow the downtrend in soyoil prices on the Chicago Board of Trade.

Soyoil prices plunged recently due to market anticipation of higher production from South America coupled with the cancellation of vegetable oil imports from China following its weak economy. “Demand for Ramadhan will help mitigate the downtrend and this will lead to mixed market sentiment.

The Malaysian Palm Oil Board is expected to release’s its production data for April on May 12 which will provide a clear indication of the market’s outlook,” Ng told Bernama.

The market expects production to be up by six per cent and inventories to hover between 1.74 million and 1.78 million tonnes for April.

Against this backdrop, CPO price are anticipated to trade between RM2,570 and RM2,630 a tonne next week.

On a Friday-to-Friday basis, May 2014 decreased RM45 to RM2,660 per tonne, June 2014 lost RM61 to RM2,615 per tonne, while both July 2014 and August 2014 fell RM68 each to RM2,592 and RM2,582 per tonne, respectively.

Weekly turnover rose to 135,503 lots from 134,193 lots last week while open interest widened to 225,335 contracts from 204,787 contracts previously. On the physical market, May South eased RM20 to RM2,680 per tonne.

The local market was closed on Thursday for the Labour Day holiday. – BERNAMA

Source : The Star