KUALA LUMPUR (March 11): The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives ended higher today after newly-appointed Primary Industries and Commodities Minister Datuk Dr Mohd Khairuddin Aman Razali said Malaysia would strengthen its ties with India to boost palm oil exports to the country.
At a press conference today, Mohd Khairuddin said the Ministry would send a delegation to India as soon as possible to resolve issues linked to criticism of New Delhi’s actions in Kashmir and India’s new citizenship law.
A dealer said the Ministry had extended an olive branch to India, the second largest importer of Malaysia's palm oil products after China.
"The move has restored market confidence as Malaysia's palm oil exports to India had dropped 54.9 percent month-on-month (m-o-m) to 21,000 tonnes in February 2020 from 47,000 tonnes in January 2020," he said.
Singapore-based Palm Oil Analytics’ owner and co-founder Dr Sathia Varqa said he was not sure whether the uptrend today was associated with the Minister's comments.
"But it is certainly a welcome gesture to India," he told Bernama.
Sathia also said the CPO futures were tracking the firmer underlying cash market on Bursa Malaysia, which saw the Plantation Index jump 83.97 points to finish at 6,393.58.
Meanwhile, another dealer said today's price performance was also buoyed by better export expectations for March due to festive buying for Ramadan which will begin in the last week of April.
In a research note today, Kenanga Research expected palm oil exports to rise 5.8 percent m-o-m to 1.15 million tonnes in March 2020, despite the March 1-10 data from cargo surveyor AmSpec showing a decline in exports of 3.5 per cent m-o-m.
"We forecast March 2020 exports to rise 5.8 percent m-o-m ahead of the Ramadan season, and as winter draws to an end," it said.
The positive forecast was also echoed by Public Investment Bank Bhd, which anticipated a pick-up in demand soon due to festive buying for Ramadan.
The Malaysian Palm Oil Board (MPOB) announced on Tuesday that Malaysia's total palm oil stocks fell 4.2 percent to 1.68 million tonnes in February 2020 from 1.76 million tonnes in January 2020, and exports dipped 10.81 percent in February 2020 to 1.08 million tonnes from 1.21 million tonnes in January 2020.
At the close, the CPO futures contract for March 2020 climbed RM31 to RM2,370 per tonne, April 2020 perked up RM29 to RM2,384 per tonne, May 2020 went up RM17 to RM2,359 per tonne and June 2020 was RM11 higher at RM2,356 per tonne.
Volume, however, slid to 53,235 lots from 68,914 lots on Tuesday, while open interest declined to 291,570 contracts from 301,184 previously.
On the physical market, March South fell RM30 to RM2,400 per tonne.