KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is likely to trade higher next week on low production.

       Speaking to Bernama, Singapore-based Palm Oil Analytics owner and co-founder Dr Sathia Varqa said the fundamentals of lower stockpiles and high exports were supportive of higher palm oil prices.

       He said cargo surveyor Societe Generale de Surveillance reported that Malaysia’s Aug 1-10 export was up by four per cent, defying lower estimates from Intertek Testing Services and AmSpec Agri Malaysia which expected a decline of 13 per cent and 10 per cent, respectively.

       "Next week, trading will be based on mid-month August export which is expected to build on the gains from Aug 1-10,” he said, adding that prices might also fall due to profit taking.

       Research firms believe the price of CPO would stay higher for some time given its tight supply situation which would likely remain at least until the end of the third quarter of 2021.

       MIDF Research forecast that tight inventory level would continue to add an upward pressure on CPO price movement but the price would soften in the second half of 2021.

       "We opine it (the reduction in price) would not be significant in view of unresolved labour shortages due to border closure and slow production growth,” it added in a note.

       Meanwhile, palm oil trader David Ng said CPO futures may continue to trade higher but he cautioned that recent high prices might deter buying interest.

       For the week just ended, Malaysian CPO futures finished mostly higher, driven by concerns over weak production and lower stockpile in the country which drove the palm oil price up on Friday.

       On Wednesday, the local CPO futures contract rallied above RM4,500 per tonne for the October 2021 benchmark contract -- the highest in two months -- on lower July palm oil stocks.

       According to the Malaysian Palm Oil Board, CPO stocks for July 2021 fell 11.85 per cent to 703,886 tonnes from 798,482 tonnes in June.

       CPO output dropped by 5.17 per cent to 1.52 million tonnes against 1.61 million tonnes in the previous month.

       On a Friday-to-Friday basis, August 2021 gained RM10 to RM4,530 per tonne, September 2021 increased RM190 to RM4,610 per tonne, October 2021 added RM237 to RM4,511 per tonne, November 2021 improved RM242 to RM4,398 per tonne, December 2021 rose RM234 to RM4,309 per tonne, and January 2022 climbed RM220 to RM4,233 per tonne.

       Weekly volume fell to 226,304 lots from 295,273 lots in the previous trading week, while open interest slid to 244,987 contracts versus 249,744 contracts previously.

       The physical CPO price for August South went up RM70 to RM4,670 a tonne on Friday. - Bernama