CPO settled up 0.76% at 533.40 on hopes that stocks in the world's No. 2 grower would fall for the first time in four months, although investor caution ahead of an official industry report trapped prices in a tight range. A median forecast of planters, pegged Malaysia's June ending stocks at 1.8mtns, a 2.2-percent drop from a month ago, which would mark the first fall in inventories since March. The official report on Malaysia's end-June palm stocks, production and exports will be released by industry regulator the Malaysian Palm Oil Board on Thursday. Global palm prices will only increase "modestly" despite the possible onset of an El Nino weather pattern and the recent military violence in Iraq, said Fitch Ratings, as palm's narrowing spread to rival soyoil and sluggish biodiesel uptake by Indonesia weighs. "In Fitch's view, an average CPO price of about $800 per tonne would reflect supply and demand fundamentals," the ratings agency said in a statement, adding that the tropical oil's supply is unlikely to record a significant increase over the next two years. More weather pattern support an El Nino event have emerged in the recent weeks and is likely to occur in September. Exports of Malaysian palm oil products in June increased 5.8% to 1,391,942 tonnes from 1,315,952 tonnes shipped in May. Malaysia has cut export tax for July to 5% from 5.5% while Indonesia has cut export tax to 10.5% from 12%. Palm oil purchases by China may decline by about 11% this year as economic expansion slows and banks tighten lending to commodity importers. Palm oil imports by India, declined after refiners bought more soybean and sunflower oils amid record global supplies. Shipments of crude and refined palm oils slid 14% to 647,756mts last month from a year earlier, the SEA of India said. Technically market is under short covering as market has witnessed drop in open interest by -8.23% to settled at 3690 while prices up 4 rupee, now CPO is getting support at 530 and below same could see a test of 526.5 level, And resistance is now likely to be seen at 535.5, a move above could see prices testing 537.5.

CPO trading range for the day is 526.5-537.5.

CPO gained on hopes that stocks in the world's No. 2 grower would fall while investor caution ahead of an official industry report.

Market pegged Malaysia's June ending stocks at 1.8mtns, which would mark the first fall in inventories since March.

Global palm prices will only increase "modestly" despite the possible onset of an El Nino weather pattern and the recent military violence in Iraq

Palm oil purchases by China may decline by about 11% as economic expansion slows and banks tighten lending to commodity importers.

BUY CPO JULY @ 530 SL 527 TGT 533.50-537.MCX