Crude palm oil (CPO) futures on Bursa Malaysia Derivatives may hit the
RM4,000 level on speculation of further declines in supply, dealers
said.
“Despite the higher prices, we expect prices to move between
RM3,800 and RM4,000 levels in the coming week as traders chase
tightening supply,” senior trader Jim Teh of Interband Group of
Companies said.
The Malaysian Palm Oil Board on Thursday reported that palm oil
stocks fell by 12.17 per cent to 1.418 million tonnes last month from
1.615 million tonnes in December.
“The current wet weather and floods in Johor and Sabah will affect the production of fresh fruit bunches (FFB)” Teh added.
He said if this scenario continued, he expected FFB production to be at
the same level as in 2001 and 2005 when production had been badly
affected and decreased by 25 per cent.
This week, the market soared with the benchmark April contract
hitting a three-year high of RM3,955 per tonne on Friday on restocking
activity despite most key physical buyers from China, India and Pakistan
shying away due to higher prices.
“Most of them feel the current price is too high for them to buy
and they are waiting for the price to go down to the RM3,500 per tonne
level,” Teh said.
On a weekly basis, the February contract rose RM59 per tonne to RM3,982 while March increased RM55 to RM3,970.
April advanced RM60 to RM3,955 and May gained RM61 to RM3,906.
Total turnover rose to 130,014 lots from the 30,084 lots recorded
during holiday-shortened week last week while open interest increased to
98,830 contracts from 89,398 contracts.
On the physical market, February South increased to RM3,980 from RM3,870 pertonne. — Bernama
Source : Business Times
