Crude Palm Oil futures flat at Rs 1,141/10 kg after 5 days of losses; outlook bearish


Crude palm oil futures were steady after five consecutive days of decline to Rs 1,141 per 10 kg as participants increased their short position as seen by the open interest. Malaysian palm oil futures rose 4.34 percent to settle at 4,060 Ringgits on Bursa Malaysia Bhd.

Crude oil pared losses in the afternoon session after a gap-down start on the firm global trend.

The agri commodity has been trading higher than 100 and 200-days’ moving averages but lower than 5, 20 and 50 days’ moving averages on a daily chart. The momentum indicator Relative Strength Index (RSI) is at 35.05 which indicates negative movement in the prices.

Indian government slashed import duty on crude palm oil to 10 percent from 27.5 percent last week to cool off soaring edible oil prices in domestic markets.

Malaysia’s crude palm oil output rose 7 percent on month to 1.5 million tons in April, data from MPOB showed. The total palm oil stocks in the nation jumped 7.1 percent to 1.5 million tons.

According to cargo surveyor AmSpec Agri Malaysia data showed that Malaysia’s palm oil exports in May are estimated to rise 1.6 percent on month to 1.4 million tons.

Sunand Subramaniam, Senior Research Associate, Choice Broking said, “Fundamentally for the coming month, we expect MCX CPO futures to be bearish as weaker demand from China due to rising COVID-19 cases in the Asian markets is weighing on the prices. Moreover, the global exports from Malaysia and Indonesia have weakened.”

“Although the demand scenario in India is uncertain even though the lockdown situation in various states have started to ease for agricultural activities, the industries continue to stock in lesser Crude Palm Oil as the retail and cosmetic demand is lower in major parts of India. Overall, we expect a bearish trend in MCX Crude Palm Oil prices for the coming month,” Subramaniam noted.

In the futures market, Crude Palm Oil (CPO) for June delivery touched an intraday high of Rs 1,116.80 and an intraday low of Rs 1,107 per 10 kg on MCX. So far in the current series, CPO has touched a low of Rs 1,077 and a high of Rs 1,209.

CPO delivery for June slightly gained Rs 1.90, or 0.17 percent at Rs 1,143 per 10 kg at 15:28 hours IST with a business turnover of 6,270 lots.

CPO delivery for July jumped Rs 5.60, or 0.50 percent at Rs 1,121.60 per 10 kg with a business volume of 773 lots.

The value of June and July’s contracts traded so far is Rs 157.38 crore and Rs 45.43 crore, respectively.

As of June 1, the MCX CPO May contract was trading at a premium of Rs 17.30 from the import cost at Kandla.

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