CPO yesterday settled up 2.28% at 547.8 tracking firmness in overseas prices and supported by strong demand in the spot market. Investors expect Chinese demand to pick up in the coming weeks as the world's second-largest palm oil buyer stocks up on the edible oil ahead of its Mid-Autumn festival in September. The government of Indonesia will lower the export duties on crude palm oil (CPO) from 10.5 percent in August to 9 percent in September. The international palm oil market is expected to remain stagnant in August and September. Stockpiles of CPO in Malaysia and Indonesia are projected to rise between September and December 2013. Rising CPO stockpiles are partly responsible for the difficulty for international palm oil prices to strengthen significantly in the second half of 2013. Global palm oil production is dominated by Indonesia and Malaysia. These two countries together account for around 85 to 90 percent of total global palm oil production. Traders said figures from the Malaysian Palm Oil Association (MPOA), showed that production in Aug. 1-20 had dropped 7.4 percent compared with July. The data was confirmed by the MPOA. 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. Technically market is under short covering as market has witnessed drop in open interest by -7.17% to settled at 2549 while prices up 12.2 rupee, now CPO is getting support at 543.7 and below same could see a test of 539.6 level, And resistance is now likely to be seen at 551, a move above could see prices testing 554.2.

Trading Ideas:

CPO trading range for the day is 539.8-554.4.

Crude palm oil ended with gains tracking firmness in overseas prices and supported by strong demand in the spot market.

Investors expect Chinese demand to pick up in coming weeks as world's second-largest palm oil buyer stocks up on the edible oil

Rising CPO stockpiles are partly responsible for the difficulty for international palm oil prices to strengthen significantly in the second half of 2013.

Crude palm oil prices in spot market gained by Rs 9.50 and settled at 559.50 rupees.