CPO futures to stay volatile next week

Published: 2009/05/02

CRUDE palm oil (CPO) futures prices on Bursa Malaysia Derivatives are expected to remain volatile next week as investors are likely to track developments in global events such as the influenza A (H1N1) epidemic, dealers said.

Despite the positive export data and declining stocks, investors are likely to be cautious due to the impact of flu outbreak on global demand.

Cargo surveyor Intertek Testing Services reported during the week that exports of Malaysian palm oil products for April rose 2.5 per cent to 1.191 million tonnes from 1.163 million tonnes in March.

"Palm oil prices will likely move within RM2,500-RM2,650 per tonne range for July contract next week," a dealer said.

During the week just ended, CPO futures closed sharply lower on concerns of the impact of the flu epidemic in Mexico on the grains and meat markets.

Vegetable oil prices have a tendency to move in tandem with grains prices.

The market was also influenced by the fall in the US soyaoil prices.

However, on Thursday, CPO futures prices on Bursa Malaysia Derivatives closed higher ahead of the weekend holiday, to rebound from previous losses on higher soyaoil prices and positive exports data.

Dealers said that despite the flu threat, the short supply of soyaoil due to the declining harvest in South America meant a worldwide shortage of vegetable oil, thus helping to push up palm oil prices.

For the week just ended May 2009, palm oil futures declined RM59 to RM2,716 per tonne, June 2009 decreased RM26 to RM2,634 and July increased RM10 to RM2,595.

Turnover fell to 93,185 lots from 114,069 lots while open interests rose to 87,025 contracts from 86,931 contracts previously.

On the physical market, May South fell to RM2,750 per tonne from RM2,820 previously. -- Bernama