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DJ. Crude palm oil futures on Malaysia's derivatives exchange ended higher Thursday following short covering and bargain hunting after losses earlier this week.

Hopes for a recovery in demand in the second half of August following better-than-expected Aug. 1-15 exports also supported prices, trade participants said.

The new benchmark November contract on Bursa Malaysia Derivatives ended 1.4% higher at 2,942 ringgits a metric ton after moving in a MYR2,882-MYR2,948 range.

Palm values Tuesday hit their lowest level in 10 months, weighed by concerns about higher stockpiles and a seasonal rise in production. But prices rebounded following gains in export estimates, with cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd., said Aug. 1-15 exports rose 7.6%-10% from a month earlier.

Trading executives tip palm oil to trade in a choppy MYR2,860-MYR2,980/ton range Friday as trade slows ahead of Id celebrations.

"Trade in the physical market is lackluster and appetite will probably remain low next week as some markets stay closed for the holidays," a physical market broker in Singapore said.

However, palm oil's wide price discount of $233/ton to rival soyoil, compared with a historical average of $100/ton, could underpin prices in the near term.

In the coming weeks, further gains in the palm oil market will hinge on unfavorable weather. An El Nino weather event, which is usually associated with warmer temperatures and limited rainfall, is brewing and could affect palm oil production in Southeast Asia in the first half of 2013, a commodities analyst in Kuala Lumpur said.

In the cash market, refined palm olein for September was offered at $950/ton, while cash CPO for prompt shipment was offered at MYR2,840/ton.

Open interest on the BMD was 116,462 lots, versus 120,690 lots Wednesday. One lot is equivalent to 25 tons.

A total of 30,017 lots of CPO were traded versus 27,064 lots Wednesday.

Ending BMD CPO futures prices in MYR/ton: 
Month   Close  Previous  Change   High    Low 
Sep'12  2,860     2,811     +49  2,860  2,798 
Oct'12  2,910     2,862     +48  2,910  2,846 
Nov'12  2,942     2,901     +41  2,948  2,882 
Dec'12  2,976     2,926     +50  2,976  2,910
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