by Hanim Adnan

Petaling Jaya

Consumer nations seen stocking up for festive season

Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives re-crossed the RM2,600 per tonne level yesterday on strong demand as consumers in India, China and the Middle East were seen stocking up for the festive season beginning next month.

Higher soyabean prices and weaker ringgit also helped support the bullish market sentiment.

The actively-traded benchmark October CPO contract rose RM53 to settle at RM2,636 while both September and August contracts closed RM43 higher at RM2,667 and RM2,723 per tonne respectively.

A local dealer said the market would remain bullish with demand likely to exceed supply, particularly in the next one month.

He said India’s decision to reduce its import taxes on CPO and soyabean for the fourth time this year would continue to support the CPO prices.

“I will not be surprised if the August CPO contract hits RM2,800 to RM2,850 per tonne by end of this week,” the dealer added.

Another encouraging development for CPO was the move by Indonesia last month to impose new taxes across all its palm oil products to discourage exports in its bid to ensure food security. Palm oil in Indonesia is mainly used for cooking.

“There are mounting concerns over lower exports from Indonesia this year which triggered higher international CPO prices currently,” said another dealer.

This is well reflected by the higher CPO exports from Malaysia from July 21 to 25 amounting to 298,560 tonnes, up 86% from the corresponding five-day period in June.

Meanwhile, Reuters said Malaysia’s palm oil stockpiles were likely to swell in July as production rose after months of slowdown.

Stocks at end-July were expected to climb 5.2% to 1.26 million tonnes from 1.20 million tonnes in June, a median estimate of five plantation houses polled by Reuters showed.

It said exports were likely to jump 13.9% to 1.08 million tonnes for the whole of July, but not enough to cut into growing reserves. Palm oil output in Malaysia is forecast to rise 9.3% to 1.28 million tonnes this month.

This entry was posted on Tuesday, July 31st, 2007 at 10:51 am and is filed under Crude Palm Oil Futures. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.