palm oil (CPO) futures prices on Bursa Malaysia Derivatives are

expected to be firmer next week on expectations of better overseas

demand amid tight supply.

An analyst said the average monthly production of 1.3 million

metric tonnes was seven per cent below last year’s average monthly

production of 1.4 million metric tonnes.

Total full year production was expected to drop six per cent year

on year from 17.5 million metric tonnes if production stayed at current

average levels, he said.

“We project the output for palm oil to be below normal due to the

delayed El-Nino effects and continue with La-Nina phenomenon,” he said.

high as RM3,200 per tonne in view of lower production in October

compared with the same month last year.

The research house said with the falling trend of palm oil and soy bean output, demand was likely to outstrip supply.

“We believe that this lower output projection will increase the

demand in China and India as the main importers of vegetable oils,” it

said.

Meanwhile, Interband Group of Companies Senior Palm Oil Trader Jim

Teh said CPO prices were expected to be lower on technical correction

and profit-taking.

He said prices had been on the uptrend due to speculative buying and was long overdue for a correction.

Throughout the week, the market was firm in line with the uptrend in other commodities markets.

On Thursday, the benchmark January 2011 hit a new 27-month high of RM3,191.

The market closed on Friday for Deepavali holiday.

Compared to last week, November 2010 rose RM140 to end the week at

RM3,180 per tonne, December 2010 surged RM134 to RM3,192 per tonne,

January 2011 went up RM130 to RM3,191 per tonne and February 2011

increased RM134 to RM3,195 per tonne.

The week’s turnover declined to 62,299 lots from 88,436 lots

recorded last week while open interest went up to 72,289 contracts from

70,234 contracts.

On the physical market, November South was higher at RM3,200 per tonne compared with RM3,070 per tonne previously. — Bernama