CPO settled up 0.37% at 535.6 on growers' estimates showing output fell in August, raising hopes that stocks in the world's No. 2 producer will tighten. Figures from the Malaysian Palm Oil Association (MPOA), a group of planters, showed that production in Aug. 1-20 had dropped 7.4 percent compared with July. Production had surged 18.2 percent in July, pushing stocks higher for the first time this year to 1.66 million tonnes from 1.65 million in June. It was expected to continue climbing due to the higher yield cycles that are typical for the second half of the year. The Malaysian Palm Oil Board will issue official data on August stocks, output and exports on Sept. 10. Palm oil posted a weekly gain of 2.6 percent, also supported by a fall in the ringgit, which improved margins for overseas buyers. Malaysian palm could face pressure going forward after top producer and rival Indonesia said it would cut its crude palm oil export tax to 9 percent for September from 10.5 percent in August. This could eat into demand for Malaysian exports, especially from second-largest palm oil buyer China as it stocks up ahead of its Mid-Autumn festival in September. Technically market is under short covering as market has witnessed drop in open interest by -2.28% to settled at 2746 while prices up 2 rupee, now CPO is getting support at 533.2 and below same could see a test of 530.8 level, And resistance is now likely to be seen at 538.1, a move above could see prices testing 540.6.

Trading Ideas:

CPO trading range for the day is 530.8-540.6.

Crude palm oil gains on growers' estimates showing output fell in August, raising hopes that stocks in the world's No. 2 producer will tighten

Figures from the Malaysian Palm Oil Association showed that production in Aug. 1-20 had dropped 7.4 percent compared with July.

Production had surged 18.2 percent in July, pushing stocks higher for the first time this year to 1.66 million tonnes

Crude palm oil prices in spot market gained by Rs 0.80 and settled at 549.90 rupees.