Crude palm Oil on MCX settled up by 0.61% at 594.8 supported by pickup in demand at the spot market. Further, restricted supply from the producing belts also added support to crude palm oil prices uptrend. Malaysia, the world's second-largest palm oil producer after Indonesia, will raise its crude palm export tax to 7.5% in February, up from 7% in January, according to Malaysian Palm Oil Board. The Southeast Asian nation calculated a palm oil reference price of RM3,279.76 (US$734.71) per tonne for February. A price above RM2,250 incurs a tax, which starts from 4.5% and can reach a maximum of 8.5%. Volatile weather conditions are behind this declining CPO production: after a dry spell (caused by the El Nino weather phenomenon), there emerged wetter-than-usual conditions (La Nina) in the last quarter of 2016. However, falling CPO output in Indonesia had a positive impact on palm oil prices. Indonesia's reference CPO price rose around 35 percent to USD $750 per ton in December 2016. At the end of December 2016 Indonesia's Ministry of Trade announced to re-introduce the USD $3 per ton export tax for CPO shipments in January 2017 as the government's reference palm oil price exceeded the USD $750 per ton threshold that separates the existence of export duties from zero rates. Indonesian palm oil exports probably rose to the highest level in 13 months in November as some buyers replenished stockpiles. Technically market is under short covering as market has witnessed drop in open interest by -4.22% to settled at 4719 while prices up 3.6 rupee, now CPO is getting support at 591.7 and below same could see a test of 588.6 level, And resistance is now likely to be seen at 597.2, a move above could see prices testing 599.6.

Trading Ideas:

CPO trading range for the day is 588.6-599.6.

Crude palm oil prices ended with gains supported by pickup in demand at the spot market.

Malaysia, the world's second-largest palm oil producer after Indonesia, will raise its crude palm export tax to 7.5% in February, up from 7% in January.

Indonesian palm oil exports probably rose to the highest level in 13 months in November as some buyers replenished stockpiles.

Crude palm oil prices in spot market gained by 1.90 rupees and settled at 602.00 rupees.