The Kuala Lumpur CPO futures market plummeted for the third consecutive week in a row last week.
The benchmark June 2010 contract closed last Friday at a 7-week low of RM2,534, down RM43 or 1.67 per cent over the week.
The price slide in the past three weeks, from the recent peak of RM2,722 looks like quite a big fall. Some players think it's time for a correction, a technical rebound.
However, with no signs that this market is anywhere near its nadir in the present bear phase the road ahead still leads south, though it might be a winding one.
Several factors are weighing this market down.
The recent strength in the US dollar, for one, was a depressant for all world commodities which uses the greenback as a medium of exchange for trade.
Weakness of crude oil, due to big supply buildup pressures and the black goo's inability to scale pass and stay above the US$80 (US$1 = RM3.31) a barrel level was another.
But what really pushed this markets against the ropes last week was the latest and one should add, disappointing export estimates.
Export monitors Societe Generale de Surveillance (SGS) and Intertek Agri Services' (IAS) March 1-25 export estimates for the commodity amounted to an average of 1.12 million tonnes, or some 24,000 tonnes above that exported in the corresponding period in February.
That's a huge comedown, compared to the earlier March 1-15 average export estimate of about 654,000 tonnes which was 67,500 tonnes or 11.75 per cent above that for first half February.
The industry expects a pickup in production in March, which does not bode well for hopes for much of a decline in end-March 2010 stocks, if any.
Conclusion: The RM2,500 a tonne psychological level is the next logical target.
- BUSINESS TIMES