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Technically Crude Palm Oil market is under short covering as market has witnessed drop in open interest by 1.56% to settled at 5879 while prices up 3.2 rupees.
Now MCX Crude Palm Oil is getting support at 590.9 and below same could see a test of 586.8 level, And resistance is now likely to be seen at 597.8, a move above could see prices testing 600.6.
Crude Palm Oil on MCX settled up 0.54% at 594.9 on short covering after prices remained under pressure tracking overseas prices amid rising production. Palm oil production in Malaysia, the world’s second-largest palm producer, typically rises in the third and fourth quarters of the year in line with the seasonal trend.
Indonesian palm oil production is expected to hit 40 million tonnes in 2018, up from an earlier forecast of 38.5 million tonnes. Due to the seasonal rise in palm oil production at the end of the year, palm stocks for the last quarter of 2018 “look heavy”.
Palm oil end-stocks in Malaysia last rose to a seven-month high in August at 2.49 million tonnes and are set to climb higher in the last quarter of the year. By end December 2018, Malaysian stocks can rise to between 3-3.3 million tonnes.
It will depend on how quickly palm prices are allowed to drop. Palm stocks in Indonesia are already close to 5 million tonnes and will keep rising gradually month after month. According to SEA monthly update during August, import of palm oil increased sharply to 920,894 tn from 868,744 tn seen in the corresponding period a year ago and 550,180 tn a month ago.
During Nov-Aug, palm oil imports (CPO + RBD) declined to 69.4 lt from 75.48 lt. Reports of higher stock levels in the country and expectation of cheaper imports from Malaysia due to zero duty may keep prices in check. It is still traded higher than last year levels due to weaker rupees and higher import duty.
Trading Ideas:
–Crude Palm Oil trading range for the day is 586.8-600.6.
–Crude Palm Oil gained on short covering after prices remained under pressure tracking overseas prices amid rising production.
–Palm oil production in Malaysia, typically rises in the third and fourth quarters of the year in line with the seasonal trend.
–Indonesian palm oil production is expected to hit 40 million tonnes in 2018, up from an earlier forecast of 38.5 million tonnes.
–Crude Palm Oil prices in spot market gained by 4.20 rupees and settled at 592.00 rupees.
Courtesy: Kedia Commodities
Source: Commodityonline.com
