Palm oil climbs

Malaysian crude palm oil futures rose on Friday to their highest in more than two weeks as investor optimism returned on recovering exports and the outlook for the euro zone debt crisis brightened. German Chancellor Angela Merkel voiced support for the European Central Bank's efforts to contain the crisis, soothing investor nerves and raising risk appetite.
Futures also posted a weekly gain of 2.8 percent, snapping five straight weeks of losses since July, after cargo surveyor data on Wednesday showed an unexpected increase in exports for the first half of the month. "Exports are definitely positive for investor sentiment. But production is also growing and there's the risk that it can be higher than export growth," said Alan Lim Seong Chun, research analyst with Malaysia's Kenanga Investment Bank.
"Exports could slow for the Aug 1-20 period compared to last month due to the upcoming holiday," he added, referring to the Muslim festival of Eidul-Fitr next week, which concludes the fasting month of Ramazan. Benchmark November palm oil futures on the Bursa Malaysia Derivatives Exchange gained 0.7 percent to close at 2,962 ringgit ($946) per tonne after touching a high of 2,973 ringgit, a level last seen on Aug. 1.
Total traded volumes stood at 32,356 lots of 25 tonnes each, higher than the usual 25,000 lots. Most investors avoided taking risky positions ahead of a long weekend, with Malaysian markets closed on Monday and Tuesday for the religious holiday. Malaysia's palm oil stocks hit a five-month high in July on slowing exports and rising production, but traders said inventory levels could slow on a recovery in exports.
On the weather front, palm oil investors are watching for the possibility of an El Nino returning to Southeast Asia, as the hot and dry weather pattern could damage palm oil yields for top producers Indonesia and Malaysia. Traders are also watching closely the drought situation in the US Midwest, which could have a better chance for rain next week, an agricultural meteorologist said. In other vegetable oil markets, the most active US soyoil contract for December delivery edged up 0.2 percent by 1003 GMT. The most active January 2013 soyoil contract on the Dalian Commodity Exchange closed 0.3 percent higher.