KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to trend lower next week on profit-taking activities, said Interband Group of Companies senior palm oil trader Jim Teh.

He said the increasing stockpiles in producing countries Indonesia and Malaysia were expected to weigh on market sentiment.

“There will be a lot of palm oil demand for Christmas, mainly from Europe. The price is considerably very high. With the production cost being around RM1,500 to RM1,800 per tonne, the current CPO price is seen as paper price and speculative play; therefore, it is already an excellent price for the commodity,” he told Bernama.

As such, the price movement next week is expected to hover between RM4,200 and RM4,300 per tonne, he said.

Singapore-based Palm Oil Analytics owner and co-founder Sathia Varqa said markets will closely monitor the extent of export rise and the production data of Southern Peninsula Palm Oil Millers’ Association (SPPOMA) for the Sept 1-25 and Sept 1-30 period.

“The mixed outlook on Malaysia’s Sept 1-25 export growth – from 18 per cent to a high of 40 per cent month-on-month – kept the market drifting. Next week’s trading will be focused on the extent of export rise and SPPOMA production data,” he said.

Palm oil trader David Ng said prices are forecast to trade with a slight downward bias as recent high prices deter further demand.

For the week just ended, Malaysian CPO futures finished mostly higher, driven by concerns over weak production and expectation of strong demand in upcoming weeks.

On a Friday-to-Friday basis, October 2021 increased RM147 to RM4,665 a tonne, November 2021 gained RM174 to RM4,544 a tonne, and December 2021 was RM180 higher at RM4,441 a tonne.

January 2022 advanced RM175 to RM4,339 a tonne, February 2022 rose RM161 to RM4,235 a tonne and March 2022 gained RM140 to RM4,118 a tonne.

Weekly volume improved to 263,245 lots from 229,593 lots in the previous trading week, while open interest decreased to 225,955 contracts versus 272,628 contracts previously.

The physical CPO price for October South added RM70 to RM4,670 a tonne. – Bernama