“Speculators will be back this week and we expect the market to pick up a little. I think CPO could go up to RM2,200. There will be a lot of paper trading,” Jim Teh, senior palm oil trader at Interband Group, told The Edge Financial Daily.

Last week, the CPO for December delivery closed at RM2,146 on Wednesday after Hari Raya, but slipped 1.4% to RM2,115 the next day. However, some buying power started showing at the end of the week when the futures contract picked up 3.4% last Friday to close at RM2,186.

Teh said CPO at RM2,200 was lucrative as inventories were still high and production of soybean had gone up.

On another note, another trader said it may be an uncertain week for CPO as the commodity was very much influenced by overseas factors at the moment.

“Currently export is slow and demand is low, but production did not pick up that much, so stockpile did not increase that much either. Therefore, there is little change to the supply-demand fundamental.

“A lot of it depends on overseas factors like crude oil, soybean and palm oil trading on Dalian Commodity Exchange as well as the US dollar. If CPO drops below the 200-day moving average (MAV) line, which is currently at about RM2,140, it would be mainly due to overseas and technical influences,” the trader said.

As at 6.45pm last Friday, crude oil was trading 44 cents higher at US$66.33 (RM229.50) per barrel but settled at US$66.09 at the close while the trader noted that soybean oil was trading at about US$117 higher than CPO.

It was possible for CPO to test the RM2,000 level, she said, although not so soon. “If it drops below the previous low of RM1,964 in July, then it may be a little bit harder for a strong rebound. Otherwise, it should bounce back,” she said.

This article appeared in The Edge Financial Daily, September 28, 2009.