KUALA LUMPUR (Dec 21): The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives reversed Monday’s losses to close higher on Tuesday tracking gains in the soybean oil market on the Chicago Board of Trade (CBOT), said palm oil trader David Ng.
Additionally, he said, gains were supported by the expectation of weaker output in the coming weeks.
“We locate support at RM4,200 per tonne and resistance at RM4,500 per tonne,” he told Bernama.
Meanwhile, Mumbai-based Sunvin Group commodity research head Anilkumar Bagani said the market ended higher on Tuesday following the move by the Indian government to cut base import duty on refined palm oil to 12.5% from 17.5% as part of efforts to increase domestic supplies and bring down the retail prices of cooking oil.
With the reduction in the basic customs duty, the effective levy on both refined palm oil and refined palmoline is expected to come down to 13.75%, effective until the end of March next year.
Bagani said the market was also influenced by the announcement by India’s Ministry of Commerce and Industry about the relaxation of import restrictions on refined palm oil till Dec 31, 2022.
“Further support came from the recovery in CBOT soybean oil market, Dalian Commodity Exchange and crude oil.
“The origin markets have once again got the much-needed support from India in the form of import duty reduction on refined palm oils,” he said.
Malaysia and Indonesia have a relatively large supply of refined palm oil products and were eyeing fresh buying support from destination markets.
“If origins maintain the competitive pricing of refined palm oils, India may switch to it from CPO and even from soft oils, depending on the net spread at the cellulose nanofiber (CNF) market,” Ng said.
At the close, CPO futures contract for January 2022 increased RM96 to RM4,853 a tonne, February 2022 gained RM88 to RM4,598 a tonne, March 2022 improved RM89 to RM4,384 a tonne, April 2022 added RM87 to RM4,219 a tonne, May 2022 climbed RM89 to RM4,104 a tonne, and June 2022 was higher by RM93 to RM4,033 a tonne.
Total volume went down to 45,487 lots from 47,538 lots on Monday, while open interest narrowed to 249,897 contracts from 251,515 contracts previously. The physical CPO price for January South was RM80 higher at RM4,900 a tonne from RM4,820 a tonne on Monday.
Source: The Edge Market