Crude palm oil (CPO) futures declined to Rs 752.40 per 10 kg on October 5 as participants increased their short position as seen by the open interest. Malaysian palm oil futures fell marginally by 0.07 percent to trade at 2,764 Ringgits on Bursa Malaysia Bhd.
According to Solvent Extractors Association (SEA), CPO import fell by 10.08 percent on yearly basis in August 2020 to 7.34 lakh tons from 8.24 lakh tons in July 2020.
Sunand Subramaniam, Senior Research Analyst at Choice Broking said, “MCX CPO futures to be bearish as rupee is forecasted to find strength with respect to dollar which could reduce import costs to India. The strong rupee is projected to reduce the price disparity and ease the pain of imports of palm oil in India.”
“The demand in the domestic market is likely to remain lower after the Government of India banned mixing of mustard oil with other edible oils such as crude palm oil,” he said.
In the futures market, CPO for October delivery touched an intraday high of Rs 758.90 and an intraday low of Rs 747.20 per 10 kg on MCX. So far in the current series, CPO has touched a low of Rs 710.40 and a high of Rs 818.50.
CPO delivery for October slipped 5.40, or 0.71 percent at Rs 752.40 per 10 kg at 16:22 hours IST with a business turnover of 4,539 lots.
CPO delivery for November eased Rs 6.70, or 0.89 percent at Rs 744.10 per 10 kg with a business volume of 2,125 lots.
The value of October and November contracts traded so far is Rs 169.72 crore and Rs 27.90 crore, respectively.
Subramaniam expects bearish trend for the month ahead and recommends selling in MCX CPO October futures at CMP Rs 750/kg for a target price of Rs 720/kg and maintaining a stop loss above Rs 765/kg on a closing basis.