KUALA LUMPUR (Nov 3): The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives ended higher for the second consecutive day on anticipation of tightness in production supply and hopes of China stepping up purchases as its government asked citizens to stock up food, said Mumbai-based Sunvin Group’s commodity research head Anilkumar Bagani.    

He said China’s government had told families to stockpile daily necessities in case of “emergencies” and urged local authorities to ensure food supplies for this winter.

“Due to the persistent higher prices and narrowed-down spread over soft oils, palm oil is experiencing a lack of destination demand at the moment.

“Further, winter is approaching in key destination markets like India, China and Pakistan, and palm oil demand is going to ease in line with the seasonal cycle,” he told Bernama.

He said the market was now waiting for the Malaysian Palm Oil Association’s (MPOA) numbers to reinforce the idea of October end-stocks.

“We estimate Malaysia palm oil October end-stocks at 1.806 million metric tons and, if realised, it would be 3.42% up from 1.746 million metric tons in September and 14.8% up from 1.573 million metric tons in October 2020,” he said.

In addition, he said, despite the lower production scenario throughout this year, palm oil stocks were still higher than the same time in last year.

“There would definitely be an improvement in palm oil production once the foreign workers start working at plantations in a gradual manner.

“Although there is a risk of persistent rains which could limit the fresh fruit bunches (FFB) collection activities, higher palm oil prices is a major incentive for the plantations to collect as many fresh fruits as possible,” he said.

Meanwhile, palm oil trader David Ng said CPO futures finished higher tracking solid gains recorded by the soybean oil futures on the US Chicago Board of Trade (CBOT).

“The market was also influenced by the expectation of a weaker output in coming weeks. These factors will continue to lift sentiment,” he said.

He located price support at RM4,800 per tonne and resistance at RM5,200 per tonne.

At the close, the CPO futures contract for November 2021 added RM46 to RM5,446 a tonne, December 2022 gained RM96 to RM5,279 a tonne, January 2022 rose RM101 to RM5,071 a tonne, February 2022 increased RM93 to RM4,909 a tonne, March 2022 improved RM80 to RM4,757 a tonne, and April 2022 expanded RM68 to RM4,614 a tonne.

Total volume slipped to 66,845 lots from 68,100 lots on Tuesday, while open interest declined to 252,127 contracts from 255,614 contracts previously.

The physical CPO price for November South rose RM20 to RM5,450 a tonne.