Crude Palm oil struggles at higher level on weak demand, sell-off in soy oil

Crude palm oil futures edged lower to 1,206.20 per 10 kg as participants trimmed their position as seen by the open interest. Malaysian palm oil futures corrected 2.89 percent to settle at 3,993 Ringgits on Bursa Malaysia Bhd.

Crude palm oil extended losses in the evening session tracking weak demand amid lockdown situation in many states to curb the coronavirus spread.

Agri commodity has been trading higher than 50, 100 and 200-days’ moving averages but lower than 5 and 20 days’ moving averages on a daily chart. The momentum indicator Relative Strength Index (RSI) is at 50.40 which indicates neutral movement in the prices.

The sell-off in soy oil and a sharp fall in crude oil dragged palm oil, which was seen inching near its all-time high level.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, MCX CPO has been trading with bearish momentum since morning. The market is sustaining below 50-SMA and we may expect the market to decline in the evening session till Rs 1,200-1,196 levels.

Apart from a sporadic pullback, we expect BMD CPO to continue with correction in coming sessions amid weak cues from Soy oil and the prospect of lower demand from India on record high price levels, said Kotak Securities.

In the futures market, Crude Palm Oil (CPO) for May delivery touched an intraday high of Rs 1,240 and an intraday low of Rs 1,203 per 10 kg on MCX. So far in the current series, CPO has touched a low of Rs 997 and a high of Rs 1,268.60.

CPO delivery for May edged lower by Rs 13.20, or 1.08 percent to settle at Rs 1,206.20 per 10 kg at 19:25 hours IST with a business turnover of 2,836 lots.

CPO delivery for June dropped by Rs 19.20, or 1.62 percent to settle at Rs 1,163.70 per 10 kg with a business volume of 4,752 lots.

The value of May and June's contracts traded so far is Rs 323.05 crore and Rs 189.30 crore, respectively.

As of May 20, MCX CPO May contract was trading at a discount of Rs 45 from import cost at Kandla.

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