Trader's Comment: CPO futures extend yesterday’s losses and drop to two-years low

CPO futures extend yesterday’s losses and drop to two-years low after crude oil plunged to new 13 months low. The released of bad US economic news had heightened recession fears despite all the government efforts to unlock credit markets. The growing concern on economic slowdown has also made global demand more sluggish. New benchmark Jan 09 initially opened RM 93 lower at 1655. Later in the afternoon, it was slammed down to break below the 1600 level, and hit intra-day low of 1593, after crude oil price fell further down to a low of $71.21 during Asian time trading. Traders have been following closely to crude oil prices because it has been leading the price of other commodities especially palm oil which has been falling so severe. News that Indonesia government proposed to scrap the palm oil export tax when crude palm oil prices hit $650-$750 a tonne, also had added onto the already weak sentiment. Nevertheless, CPO prices manage to recover a little from the fall after some short covering activities take place. Benchmark Jan 09 rebounded from the low of 1593 and closed at 1652. Daily volume increased slightly, with 19,093 contracts changed hands.