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Crude Palm Oil Futures on Bursa Malaysia Derivatives: Bullish or Bearish?

Nov 25, 2024 at 12:00 AM

Crude palm oil futures on Bursa Malaysia Derivatives are set to make an impact this week. A dealer predicts a bullish bias driven by potential bargain-buying after the recent selldown. Palm oil trader David Ng highlights the expectation of weaker production lifting market sentiment, especially as the palm oil production seasonally slows down. He anticipates prices to range between RM4,600 and RM4,900 per tonne. Meanwhile, Interband Group of Companies' senior palm oil trader Jim Teh believes the CPO futures contract will trade lower in the coming week due to profit-taking after recent rallies. Physical demand for CPO is expected from various regions including India, China, Pakistan, Middle Eastern countries, the United States, and Europe, with prices expected to range between RM4,000 and RM4,200 per tonne.On a Friday-to-Friday basis, different contract months showed significant price movements. The new spot-month December 2024 contract decreased by RM329 to RM4,790 per tonne, January 2025 dropped by RM374 to RM4,714 per tonne, and February 2025 shrank by RM411 to RM4,642 per tonne. The March 2025 contract lost RM405 to RM4,547 per tonne and April 2025 retreated RM372 to RM4,458 per tonne. The new May 2025 contract stood at RM4,373 a tonne.Total weekly volume also saw a decline, dropping to 532,086 lots from 624,489 lots in the preceding week, while open interest fell to 239,910 contracts from 253,114 contracts a week earlier. The physical CPO price for December South was at RM4,950 per tonne.These market movements and trends have significant implications for palm oil traders and investors. The interplay between production expectations, demand from different regions, and short-term trading activities is shaping the future of crude palm oil futures on Bursa Malaysia Derivatives.

Unraveling the Future of Crude Palm Oil Futures on Bursa Malaysia

Dealer's Perspective on Bullish Bias

A dealer's insight into the expected bullish bias in crude palm oil futures is crucial. The recent selldown has created opportunities for bargain hunters. As the market enters a seasonally lower-production period, there is optimism that prices will find support within the RM4,600 to RM4,900 per tonne range. This bullish sentiment is likely to influence trading decisions and market dynamics in the coming days.

Traders are closely monitoring these trends as they assess the potential for gains. The dealer's view provides a valuable perspective on how market forces are likely to shape the future of crude palm oil futures on Bursa Malaysia Derivatives.

Impact of Production and Demand

Palm oil trader David Ng's emphasis on weaker production lifting sentiment is significant. The seasonal nature of palm oil production plays a crucial role in determining market trends. With production expected to slow down, there is a belief that demand from various regions will have a greater impact on prices.India, China, Pakistan, Middle Eastern countries, the United States, and Europe are all key markets for physical CPO demand. The varying price ranges predicted for this week reflect the expectations of supply and demand dynamics in these regions. Traders need to stay attuned to these factors to make informed trading decisions.

Jim Teh's view on profit-taking following recent rallies also adds another layer of complexity. The interplay between production expectations and profit-taking activities will continue to shape the market. Understanding these forces is essential for navigating the volatile world of crude palm oil futures.

Contract Month Price Movements

The price movements of different contract months provide valuable insights into the market's short-term trends. The significant drops in December 2024, January 2025, February 2025, March 2025, and April 2025 contracts highlight the volatility and the impact of various factors on prices.The new May 2025 contract at RM4,373 a tonne indicates the evolving market conditions. Traders are analyzing these price movements to identify patterns and make predictions about future price directions. The weekly volume and open interest data also offer clues about market participation and sentiment.

By closely monitoring these contract month price movements, traders can gain a better understanding of the market's pulse and make more informed trading decisions. It is a dynamic and ever-changing landscape that requires continuous analysis and adaptation.

Physical CPO Price and Market Implications

The physical CPO price for December South at RM4,950 per tonne adds another dimension to the market. This price reflects the actual supply and demand dynamics in the physical market. Traders need to consider both the futures market and the physical market to get a comprehensive view of the situation.The differences between futures prices and physical prices can provide opportunities for arbitrage and hedging. Understanding these relationships is crucial for managing risk and maximizing profits in the crude palm oil market.The market implications of these price differentials and the physical CPO price are far-reaching. They affect not only traders but also the entire palm oil supply chain, from producers to consumers.

As the market continues to evolve, staying informed about the physical CPO price and its implications is essential for success in the crude palm oil futures market.