Mumbai, 21 June (Commodities Control) Crude palm oil (CPO) turned bearish on Bursa Malaysia Derivatives (BMD) last week amid technical correction. BMD CPO futures dropped 5.6 percent on weekly basis; however, Indian market witnessed a bounce back in CPO futures which settled nearly flat in the last session, recovering from four and half month low.
However, Malaysian market may gain support on recent export data which shows recovery in past week as Chinese buying in Malaysia increased but CPO prices are expected to see more correction this week on some profit taking activities and may trade under pressure due to high stocks and weak export demand, said a trade analyst.
The latest data released by ITS showed that Malaysia exported 945,745 tonnes of palm oil in early 20 days of this month against 953,474 tonnes during May1-20, which shows a fall by 0.81 percent.
BMD CPO dropped amid shrinking exports and high stockpiles in Malaysia and Indonesia as well. BMD CPO futures dropped 5.6 percent on weekly basis; however, Indian market witnessed a bounce back in CPO futures which settled nearly flat in the last session, recovering from four and half month low.
In fact, CPO prices in Indian market have already seen a big correction in past one month as prices down by over 19 percent from its peak, said market analysts.
BMD CPO September futures ended RM 38 or 1.12 percent higher at RM 3415 per tonne on Friday while the same contract had closed at RM 3,620 per tonnes in the corresponding previous week. The prices dropped RM 205 or 5.6 percent on weekly basis.
A senior official of a major trading group of companies dealing in palm oil said that a bearish trend and slow demand may further mount pressure resulting in a downtrend in prices of palm oil.
The analyst expect the most active CPO future contract to trade between RM3,100 and RM 3,200 per tonnes.
As per the data released by Intertek Testing Services, exports for June 1-15 dropped 3.8 percent to 658,900 tonnes from 685,114 tonnes shipped in the same period last month.
Cargo surveyor Amspec Malaysia said exports in the June 1-15 period declined 6.2 percent to 652,770 tonnes from 695,764 tonnes in the same period last month.
However, Palm oil trader David Ng estimated the price to trade within the similar range as market awaits key production projections and export data next week, as per a report.
Malaysia Palm Oil Board's website showed that Malaysia has for the seventh straight month maintained the export tax for CPO at eight per cent for July 2021 after the market price surpassed RM3,450 per tonne. The new rate would be effective from July 1 to 31, which is a continuation of the export tax rate since Jan 1, 2021.
Malaysian market may also remain influenced by China’ s Dalian Commodity Exchange (DCE) and Chicago Board of Trade (CBOT) soybean complex as seen in the last session.
However, CPO is likely to remain range bound in Indian market as seen in the last week as hotel, restaurants have opened in most of the cities of the country following which bulk will be active in the markets.
CPO June contract settled at Rs 1,023 per 10kg on Friday after recovering from Rs 964.10 per 10kg on June 14, 2021, the lowest level since Feb 3, 2021 when CPO June contract had dropped to Rs 955/10kg at Multi Commodity Exchange (MCX).
The government said last week that edible oil prices in India are showing a declining trend across a wide array of oils. As per the data from Department of Consumer Affairs, over the past month, the prices of edible oils are now coming down. In some cases, the decline is by as much as nearly 20 percent, as shown in prices in Mumbai.
The price of Palm Oil was Rs 142 per kg on May 7 ‘21 now it came down to Rs 115 per kg, a drop of 19percent, said the government.
(By Commoditiescontrol Bureau: +91-22-40015505)
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