Crude Palm Oil slips 3% this week on MCX driven by weak demand; downward momentum likely to continue


Crude palm oil futures pulled back after touching a fresh lifetime high on MCX during the week on weak demand prospect, sell-off in soyoil and localized lockdown in top consumer India. Malaysian palm oil August futures tanked 2.89 percent to settle at 3,993 Ringgits on Bursa Malaysia Bhd.

It ended the week with a loss of Rs 37.5 or 3 percent on the domestic bourse. Crude palm oil prices fell in three out of the five trading sessions on the MCX.

The agri commodity has been trading higher than 50, 100 and 200 days’ moving averages but lower than the 5 and 20 days’ moving averages on a daily chart. The momentum indicator Relative Strength Index (RSI) is at 51.05 which suggests sideways movement in the prices.

India’s palm oil imports in 2021 are likely to decline for the second straight year as pandemic concerns continue to unfold in the country, forcing refiners to dial back production and keep stocks at a bare minimum level, said S&P Global Platts.

It said that palm oil consumption was impacted as it preferred by hotels, restaurants and catering (HoReCa) sector which has been badly hit by the virus restriction in the country.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “For the upcoming week, Crude Palm Oil is likely to continue its sideways to marginal downside momentum towards Rs 1,180 mark. Traders may find the sell on rise opportunity in MCX CPO from the resistance around Rs 1,220-1222, keeping a stop loss at Rs 1,234 to chase the target at Rs 1,180.”

In the futures market, Crude Palm Oil (CPO) for May delivery touched an intraday high of Rs 1,240 and an intraday low of Rs 1,203 per 10 kg on MCX. So far in the current series, CPO has touched a low of Rs 997 and a high of Rs 1,268.60.

CPO delivery for May slumped Rs 11.20, or 0.95 percent to close at Rs 1,171.70 per 10 kg with a business turnover of 4,793 lots.

The value of May and June’s contracts traded on May 21 was Rs 353.92 crore and Rs 214.45 crore, respectively.

As of May 21, MCX CPO May contract was trading at a discount of Rs 21.7 from import cost at Kandla.

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