CPO yesterday settled down -1.01% at 498.6 on market talk that production growth in Malaysia was significantly higher last month, stoking concerns about a potential build up in stocks. Global stocks of palm oil remain relatively low when compared to historical levels, however prices may remain at current levels in the medium term due to the higher stocks of palm oil in Malaysia and Indonesia at the beginning of the year. Although current stock levels have drawn down to their lowest levels since March 2011, forward prices remain depressed due to the expectations of large oilseed crops and the usual palm peak season in the second half of the year. The supply and demand fundamentals however in the global vegetable oils sector generally remain tight and unforeseen negative weather events could impact global yields and therefore pricing. The Malaysian Palm Oil Board will issue official July data on Aug. 14. Exports of Malaysian palm oil products from July 1 to 25 fell 7 percent to 1,085,392 tons when compared to 1,167,266 tons shipped during June 1 to 25 period, as per industry sources. Indonesia has set export tax for palm oil at 10.5% for August, unchanged from July's 10.5%.Last week, crude palm oil and palm oil prices recorded a weak trend in the global market on speculation that the upcoming palm oil production season may cause to build large palm oil inventories in Malaysia, the world's second largest palm oil producer after Indonesia. Now CPO is getting support at 496.8 and below same could see a test of 495 level, And resistance is now likely to be seen at 501, a move above could see prices testing 503.4.
Trading Ideas:
CPO trading range for the day is 495-503.4.
CPO dropped on market talk that production growth in Malaysia was significantly higher last month.
Global stocks of palm oil remain relatively low when compared to historical levels, however prices may remain at current levels.
The Malaysian Palm Oil Board will issue official July data on Aug. 14.
Crude palm oil prices in spot market dropped by Rs 4.90 and settled at 505.70 rupees.
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