Crude palm Oil on MCX settled up by 2.2% at 538.6 tracking a firm trend at spot market on rising demand. Further, restricted supplies from producing regions also added support to crude palm oil prices uptrend. Crude palm oil (CPO) inventories in Indonesia, the world's biggest palm oil producer, are expected to rise by 12% on higher output. Palm oil stockpiles may rise to 1.9 million tons compared to 1.695 million tons in August, it's highest since May, report said after compilation of the median of seven estimates from analysts, refiners and plantation executives. Malaysian palm oil production is expected to drop by between five per cent and eight per cent this year due to the prolonged El Nino drought. Palm oil production in Malaysia, the second largest palm oil producer, has eased by 1.0 million tonnes to 1.5 million tonnes in the first half of this year due to the lingering effects of the El-Nino weather pattern. In 2015, Malaysian palm oil production stood at 19.96 million tonnes. Production in Indonesia had reduced substantially in the first half of the year, and output for the full year would be below last year’s level. Demand from China has increased quite well in the past quarters, partly due to Mooncake festival and it is only natural that after a big increase it would come down slightly. Technically market is under short covering as market has witnessed drop in open interest by -0.33% to settled at 5818 while prices up 11.6 rupee, now CPO is getting support at 529.9 and below same could see a test of 521.3 level, And resistance is now likely to be seen at 543.2, a move above could see prices testing 547.9.

Trading Ideas:

CPO trading range for the day is 521.3-547.9.

Crude palm oil prices gained tracking a firm trend at spot market on rising demand

CPO inventories in Indonesia, the world's biggest palm oil producer, are expected to rise by 12% on higher output.

Malaysian palm oil production is expected to drop by between five per cent and eight per cent this year due to the prolonged El Nino drought.

Crude palm oil prices in spot market dropped by 1.00 rupees and settled at 556.80 rupees.