KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is likely to see technical correction but on a downside bias in the upcoming holiday-shortened trading week.

       Malaysia will celebrate its National Day on Aug 31.

       Interband Group of Companies senior palm oil trader Jim Teh said the increasing stockpiles in producing countries Indonesia and Malaysia were expected to weigh on the market sentiment.

       "There is surplus palm oil in the market with Indonesia having a stockpile of around four million tonnes and Malaysia about 1.5 million tonnes; and as the current price is considerably very high, the bubble could burst very soon.

       "In addition, with the production cost being around RM1,500 to RM1,800 per tonne, the current CPO price is seen as paper price and speculative play; therefore, it is already an excellent price for the commodity,” he told Bernama.

       On another note, palm oil trader David Ng said the recent exports report would likely affect sentiment next week.

       Independent inspection company AmSpec Agri Malaysia said on Wednesday that exports of Malaysian palm oil products for Aug 1-25 fell 12.27 per cent to 988,809 tonnes from 1.13 million tonnes shipped during the same period in July.

       "Given the recent weakness in export performance, we expect to see the price trade in a tight range with downside bias at between RM4,100 and RM4,380 next week,” he added.

       For the week just ended, Malaysian CPO futures saw a choppy trading, taking the cue from the benchmark regional markets, soybean oil market movement, as well as slower production and weaker export sentiment.

       On a Friday-to-Friday basis, September 2021 increased RM46 to RM4,560 a tonne, October 2021 surged RM72 to RM4,443 a tonne, and November 2021 rose RM68 to RM4,333 a tonne.

       December 2021 gained RM57 to RM4,250 a tonne, January 2022 added RM35 to RM4,174 a tonne, and February 2022 improved RM5 to RM4,096 a tonne.

       Weekly volume slipped to 292,390 lots from 339,179 lots in the previous trading week, while open interest narrowed to 251,315 contracts versus 263,451 contracts previously.

       The physical CPO price for September South remained unchanged at RM4,600 a tonne on Friday. - Bernama