KUALA LUMPUR: Crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives ended the week lower amid bearish sentiment over an increase in export tax to 6% for February, which may curb short-term demand.
Palm oil trader David Ng, citing the Malaysian Palm Oil Board, noted this was up from the 5% export tax for January, which in turn followed a period of tax-free exemption from May to December 2019 in line with the government’s aim then to boost palm oil exports and expand into new markets.
“We locate support at RM2,780 and resistance at RM2,900 per tonne,” he said.
Singapore-based Palm Oil Analytics owner and co-founder Dr Sathia Varqa said the firmer ringgit against the US dollar was another reason for the sell-off as the tropical vegetable oil became expensive to international buyers amid the weak market over Indian import curbs.
“The futures contract closed in the red every day of this week, the worst in seven years, pulling prices down to the lowest in just over a month,” he said, adding that the successive fall in CPO prices reclaimed a US$26 discount over soybean oil and attracted buying opportunity.
At the closing bell, the CPO futures contract for February 2020 lost RM46 to RM2,922 per tonne, March 2020 eased RM45 to RM2,878 per tonne, April 2020 slipped RM49 to RM2,837 per tonne and May 2020 fell RM47 to RM2,801 per tonne.
Volume decreased to 63,239 lots from yesterday’s close of 65,599 lots while open interest declined to 305,303 from 309,898 contracts previously.
On the physical market, January South ended at RM2,990 per tonne today. – Jan 17, 2020 Bernama
