Crude palm Oil settled up by 0.4% at 401.6 on late short covering after prices dropped on expectation of higher supply from Indonesia. Indonesia is estimated to produce 31.5 million tons of CPO compared to 33 million tons in 2014, a rise of 8.20%. Indonesia has witnessed an immense rise of 40% in its production since 2010-11. Total palm oil production is expected to gain by 4.22% in 2015 compared to 2014. Prices of the palm oil were also down on subdued demand following weak Malaysia palm oil export data. Malaysian palm oil exports in July fell 6.4% from June to 1.54 million tons, DowJones reported citing Intertek Testing Services. In the latest USDA report, global palm oil production in 2015/16 forecasted to increase by 6 % to 65.17 million tons (mt) compared to 61.65 mt in 2014/15. Indonesia imposes Palm Oil Export Levy, which require exporters to pay a tax of $50 per tonne of crude palm oil and $30 for processed palm oil product shipments. Indonesia’s CPO output reached 2.8 mt in June, rose for the fourth month to hit its highest since at least August on supplies from new plantations. Meanwhile, Indonesia expects to face moderate El Nino weather conditions from July to November. Technically market is under short covering as market has witnessed drop in open interest by -1.44% to settled at 7133 while prices up 1.6 rupee, now CPO is getting support at 397.4 and below same could see a test of 393.1 level, And resistance is now likely to be seen at 404.2, a move above could see prices testing 406.7.

Trading Ideas:

CPO trading range for the day is 393.1-406.7.

Crude palm oil prices ended with gains on late short covering after prices dropped on expectation of higher supply from Indonesia.

Indonesia is estimated to produce 31.5 million tons of CPO compared to 33 million tons in 2014, a rise of 8.20%.

Total palm oil production is expected to gain by 4.22% in 2015 compared to 2014.

Crude palm oil prices in spot market dropped by 6.30 rupees and settled at 395.70 rupees.