CPO price falls to near 30-day low of RM3,329

PETALING JAYA: Early signs of the US dollar strengthening are prompting a sell-off in commodities, and crude palm oil (CPO) is no exception.

CPO price fell to a near 30-day low RM3,329 per tonne at 5pm yesterday, down RM66 for the day.

The benchmark three-month futures contract is off its all-time high of RM4,330 on March 3 but above a recent low of RM3,170 on April 2.

A plantation sector analyst told StarBiz: “The argument is that once the US dollar stabilises or strengthens, people (funds) will be selling down on commodities.”

Prior to this, it was widely believed that global funds had been flowing into the commodity sector, seen as a safe haven from the weakening greenback.

The dollar is largely seen to be strengthening with the US Federal Reserve Bank's comment on April 30 that it was ready to pause on rate cuts.

MIMB Investment Bank Research manager of technical analysis Lee Cheng Hooi said: “Crude palm oil and soybean oil have come off their highs and are currently on the downtrend.”

Lee said he expected CPO price to touch RM3,290 per tonne in the near term and to go to a support level of RM3,033 after that.

“The plantation and oil and gas counters that had led the recent (Malaysian) market rallies have hit what chartists call the 62% retracement level (a rule of thumb for where there is a cap on the market price),” he told StarBiz.

Lee named IOI Corp Bhd, Kuala Lumpur Kepong Bhd, KNM Group Bhd and flour miller PPB Group Bhd as being in “the critical 62% sell area.”

Rice futures had also fallen as funds had flowed out of commodities and commodity-related stocks, he said, adding: “With the dollar strengthening and the possible bottoming of the cycle of interest rate easing (in the US), there has been a reversal on all these commodity plays.”

Bloomberg reported that the dollar traded near a five-week high against the euro before a government report forecast to show US companies lost workers at a slower pace in April.

The dollar hit a high of 1.5440 per euro at 2.25pm Malaysian time but had eased to 1.5492 at 5pm.

It said the greenback was headed for its first back-to-back weekly gain this year against the euro on speculation the Federal Reserve would stop cutting borrowing costs.

The strengthening dollar had actually caused CPO price, which is quoted in ringgit, to rise on Wednesday with the benchmark three-month futures contract going up by RM46 to RM3,395 per tonne, but has since followed the similar downtrend of other major commodities.