Crude palm Oil on MCX settled up by 0.29% at 516.9 on supply concerns from top producers. The data showed that Malaysian palm oil production is expected to drop by between 5-8% this year due to the prolonged El Nino drought. There are prevailing production worries, and forecast of year-end monsoon rains that may disrupt the palm-fruit harvest in Malaysia. Prices of the oil will also be supported by Malaysian government's plans to implement higher bio-diesel mandates for the transportation and industrial sector from Dec 1, which will increase demand for palm oil as it is used as a component of bio-diesel. 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 -2.9% to settled at 4619 while prices up 1.5 rupee, now CPO is getting support at 515.3 and below same could see a test of 513.8 level, And resistance is now likely to be seen at 519, a move above could see prices testing 521.2.

Trading Ideas:

CPO trading range for the day is 513.8-521.2.

Crude palm oil prices gained on supply concerns from top producers.

The data showed that Malaysian palm oil production is expected to drop by between 5-8% this year due to the prolonged El Nino drought.

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 0.50 rupees and settled at 519.20 rupees.