Commodity Trading Tips for Crude Palm Oil by KediaCommodity

Ajay Kumar Kedia 9 June 2014

Crude-Palm-Oil CPO settled up 1.12% at 513.3 taking positive cues from spot market on rising demand. Besides, tight inventories in the physical market due to restricted arrivals from producing regions too supported the prices. Palm oil stocks in Malaysia likely edged up for a third straight month in May to touch their highest since the end of January, a survey showed, as a rise in production outstripped export demand for the tropical oil. Stockpiles in Malaysia, the world's second-largest producer, have grown continuously since the beginning of March due to higher crude palm oil output amid poor global demand. A further rise in inventories would add pressure on benchmark palm prices that are already down nearly 10 percent this year. May's palm output was seen rising 7.1 percent to 1.67 million tonnes, according to the survey. Exports were forecast at 1.36 million tonnes, up 8.0 percent from April. Cargo surveyors earlier this week reported that Malaysian palm exports were 8-9 percent higher in May from a month ago. The rise was slower compared to a 23 percent jump recorded for the May 1-15 period as global demand unexpectedly lost momentum in the second half of the month. Despite forecasts of a high possibility that the El Nino weather condition will return this year, planters and traders expect minimal damage to palm crops for now, although do not rule out that prices could rebound if there is a severe drought. Technically market is under fresh buying as market has witnessed gain in open interest by 3.09% to settled at 1633 while prices up 5.7 rupee, now CPO is getting support at 508.6 and below same could see a test of 504 level, And resistance is now likely to be seen at 515.8, a move above could see prices testing 518.4.