CPO Futures Contract Closes Lower Due to Weaker Demand Expectation
The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives closed lower on Wednesday due to concerns over an expectation of weaker demand in the coming weeks, which might raise the overall stock level in the country, said a dealer.
Seasonal Patterns and Soybean Oil Prices Contribute to Decline
Palm oil dealer David Ng said demand tends to be weaker towards the end of the year based on seasonal patterns. He also attributed the decline to lower soybean oil prices on the Chicago Board of Trade (CBOT), which added downward pressure on prices.
Technical Analysis Suggests Support and Resistance Levels
Ng told Bernama that "We see support at RM4,750 and resistance at RM4,950."
Contract Prices and Trading Volume
At the close, the new spot month December 2024 contract was RM90 lower to RM4,926 a tonne, the January 2025 contract lost RM98 to RM4,863, and the February 2025 contract fell by RM109 to RM4,815. The March 2025 contract was down RM108 to RM4,729 a tonne, April 2025 slipped RM105 to RM4,629, and May 2025 fell RM94 to RM4,526. Trading volume fell to 92,644 lots from 96,083 on Tuesday, while open interest dropped to 244,155 contracts from 252,020 previously.
Physical CPO Price Also Declines
The physical CPO price for December South slid by RM20 to RM5,060 per tonne.
Conclusion
The CPO futures contract closed lower due to weaker demand expectation and lower soybean oil prices. Technical analysis suggests support and resistance levels, and physical CPO price also declined.
Frequently Asked Questions
Q: Why did the CPO futures contract close lower?
A: The contract closed lower due to concerns over an expectation of weaker demand in the coming weeks, which might raise the overall stock level in the country.
Q: What contributed to the decline in prices?
A: Lower soybean oil prices on the Chicago Board of Trade (CBOT) and seasonal patterns of weaker demand towards the end of the year.
Q: What are the support and resistance levels?
A: The support level is at RM4,750 and the resistance level is at RM4,950.
Q: How did trading volume and open interest change?
A: Trading volume fell to 92,644 lots from 96,083 on Tuesday, while open interest dropped to 244,155 contracts from 252,020 previously.
Q: What is the physical CPO price for December South?
A: The physical CPO price for December South slid by RM20 to RM5,060 per tonne.