The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to rebound next week, as global central banks are set to boost liquidity in the COVID-19- hit markets to instill market confidence

The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to rebound next week, as global central banks are set to boost liquidity in the COVID-19- hit markets to instill market confidence.

Singapore-based Palm Oil Analytics owner and co-founder Dr Sathia Varqa said over the last week, a series of big money measures had been announced by several central banks, including the more than US$1 trillion of liquidity by the US Federal Reserve to stem the market meltdown caused by the COVID-19 jitters.

“Apart from that, a stimulus package from the European Central Bank (ECB) and a slash in reserve ratio requirement (RRR) from China also offered a powerful mix of policy weapons to arrest the rout in the financial markets.

“Therefore, CPO futures prices may see a rebound next week, following a strong mix of policy weapons used to instill confidence in the market,” he told Bernama.

For the week just ended, the market was traded range-bound, mainly influenced by COVID-19 and crude oil price crash that rattled the global equities, commodities, bonds and currencies, which spiralled downwards.

The commodity prices were also affected by lower palm oil and CPO stocks in February 2020 as reported by the Malaysian Palm Oil Board (MPOB).

At last Thursday’s close, the CPO futures on the local bourse even slid below RM2,300 per tonne after the World Health Organisation (WHO) declared COVID-19 a pandemic.

The third-month benchmark CPO futures contract for May 2020 delivery declined by RM82 or 3.48 per cent to close at RM2,277 per tonne from RM2,359 yesterday — the weakest level since Oct 17,2019 when the benchmark contract for January 2020 finished at RM2,259 per tonne.

However, the fall in the past week was limited by the weakening ringgit against the US dollar as it made the commodity more attractive to international traders.

On a Friday-to-Friday basis, the CPO futures contract for March 2020 retreated RM146 to RM2,302 per tonne, April 2020 dwindled RM141 to RM2,323 per tonne, May 2020 was RM167 lower at RM2,284 per tonne, and June 2020 tanked RM183 to RM2,270 per tonne.

Weekly turnover widened to 392,393 lots from 344,679 lots at last Friday’s close, while open interest expanded to 321,588 against 306,292 contracts previously.

On the physical market, the CPO price for March South was RM80 easier at RM2,400 per tonne from RM2,480 per tonne a week before.