SEPTEMBER 6 CPO PRICE: Skyrocketing To Its Highest Level, What's Driving the Demand

November 2016 CPO futures, the most active contract on Bursa Malaysia, rose 0.34% or 9 points to RM2,653 a ton at 09:56 a.m. Jakarta time.

The price of palm oil earlier opened up 0.23% or 6 points at RM2,650 a ton. The price of palm oil this morning rose to its highest level after touching RM2,658 on March 29.

On Monday (5/9/2016), the price of November CPO futures closed up by 1.89% or 49 points to RM2,644 a ton.

According to a survey by the CIMB Futures team, as quoted by Bloomberg yesterday, Malaysia's palm oil stocks are predicted to fall by 18% (m-o-m) to 1.45 million tons at the end of August.

Meanwhile, the increase in monthly fresh fruit bunch (FFB) production (m-o-m) by 5.4% is below the average historical rate in August of 6.4% over the past five years, partly because of the continuing impact of El Nino.

Year-on-year (y-o-y), CPO production is estimated to fall by 19% in August as the El Nino effect hits FFB yields.

The prediction of lower stocks in August is seen as positive for CPO prices, although this is also offset by rising production prospects for the following months.

On the other hand, the Malaysian ringgit exchange rate was seen to weaken by 0.18% to 4.0813 against the US dollar, after opening higher at 4.0725.

November 2016 CPO Futures Contract Price Movements