KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to trade lower next week on profit-taking after prices rallied to above RM5,600 a tonne, Interband Group of Companies senior palm oil trader Jim Teh said.

He said most of the traders who are celebrating the Chinese New Year will be on a long weekend holidays.

“The market is forecast to trade between RM5,000 and RM5,100 per tonne next week,” he told Bernama.

He said the recent announcement by Indonesian government on 20 per cent mandatory domestic sales for palm oil is hitting very hard on the Asian people especially in China, Pakistan and India because it will cause food prices to go up.

Meanwhile, palm oil trader David Ng said CPO is expected to trade on a downward bias as profit-taking is expected to emerge due to the recent rally in prices.

Hence, he expects the price to trade between RM5,400 and RM5,750 a tonne next week.

Earlier this week, Indonesia imposed a rule starting on Jan 27 for a mandatory portion of palm oil to be sold domestically at a maximum price of 9,300 rupiah per kg for CPO and 10,300 rupiah per kg for olein, its Trade Minister Muhammad Lutfi said.

The so-called Domestic Market Obligation (DMO) will be applied to all cooking oil exporters and they will be required to sell 20 per cent of their planned export to the domestic market, Lutfi said.

For the week just-ended, the CPO futures finished higher tracking gains in the crude oil market, stronger soybean oil performance on the US Chicago Board of Trade, and Indonesia’s restriction on CPO exports.

On a Friday-to-Friday basis, February 2022 soared RM299 to RM5,803 a tonne, March 2022 gained RM337 to RM5,790 a tonne, April 2022 added RM306 to RM5,628 a tonne, May 2022 improved by RM262 to RM5,441 a tonne, June 2022 rose RM218 to RM5,266 a tonne, and July 2022 perked up RM191 to RM5,106 a tonne.

Weekly volume swelled to 324,049 lots from 296,878 lots last week, while open interest widened to 281,952 contracts from 267,885 contracts previously.

The physical CPO price for February South rose RM300 to RM5,800 a tonne. – Bernama