The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives erased Wednesday’s gains to end lower today weighed down by market talk of the Chinese government cracking down on speculative bets in the futures market in general, a dealer said.
Singapore-based Palm Oil Analytics’ owner and co-founder Dr Sathia Varqa said the Chinese government is looking at ways to increase coal supply to help bring energy prices down. Palm oil price has been rising sharply on the back of higher energy prices.
“Any reversal in energy prices could see palm oil prices going through a series of correction,” he told Bernama.
He added that rumours of the Indian government mulling a ban on the CPO and bean oil futures market on the Indian Multi Commodity Exchange of India (MCX) to tame excessive speculative price rise also brought down the price on Bursa Malaysia today.
“I heard that the Indian government is trying to ban CPO futures and bean oil futures in the Indian market — it is rumoured that they are going to ban this and suddenly the market in Bursa Malaysia was down. The reason for the rumours is they want to stop excessive speculation to cool down the prices.
“CPO futures pulled back from January 2022’s mid-day close of RM5,165 to a low of RM4,940 and eventually the last done was at RM4,966 or minus 105 points, giving up 86% of the gains yesterday,” he said.
In addition, he said the Southern Peninsula Palm Oil Millers' Association (SPPOMA) data revealed that Oct 1-20 production was firmed by 1.8% compared with the same period last month.
“The Dalian Commodity Exchange closed up by over 324 points for soybean oil and over 300 points for palm olein — it’s more than 3% increase from yesterday.
“Because Dalian close at 3.15pm, we probably did not get the chance to digest the news about China government’s crackdown — I have a feeling that Dalian will fall tomorrow,” he said.
Meanwhile, palm oil trader David Ng said CPO hit an intraday high of RM5,220 but retraced all the gains to close lower as report of a potential curb on speculative activity on agriculture products from the Chinese government is putting pressure on prices.
“The recent spike in prices also caused a bit of profit-taking activities. We locate support at RM4,750 a tonne and resistance at RM5,100 a tonne,” he said.
At the close, the CPO futures contract for November 2021 decreased RM91 to RM5,209 a tonne, while December 2021 and January 2022 both fell RM103 to RM5,074 and RM4,968 a tonne respectively, February 2022 eased RM99 to RM4,869 a tonne, March 2022 deducted RM94 to RM4,759 a tonne and April 2022 dipped by RM96 to RM4,634 a tonne.
Total volume rose to 80,761 lots from 64,497 lots on Wednesday while open interest widened to 274,001 contracts from 255,174 contracts previously.
The physical CPO price for October South was RM100 lower at RM5,220 a tonne.
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