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DJ. Crude palm oil futures on Malaysia's derivatives exchange ended higher Friday, as comments by German Chancellor Angela Merkel helped sentiment and boosted risk appetite.

The benchmark November contract at Bursa Malaysia Derivatives ended 0.7% higher at 2,962 ringgit a metric ton after moving in a MYR2,938-MYR2,973 range.

The German chancellor said the country was "committed to do everything we can in order to maintain the common currency."

Palm oil is also up 3% this week, reflecting optimism about export demand in the second half of August and a likely drawdown in stockpiles as estate workers go on Id al-Fitr holidays, limiting oil palm fruit harvesting and slowing output of the tropical oil that is used to make a wide variety of consumer products ranging from chocolate bars to butter and shampoo.

Cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. said Aug. 1-15 shipments rose by 7.6%-10% from the previous month. Intertek's upcoming Aug. 1-20 shipment data will be issued Wednesday.

"We saw quite a fair bit of short covering during afternoon trade," as traders aren't keen to hold on to riskier positions over the long weekend, a trading executive at a Kuala Lumpur-based investment bank said.

Malaysian markets will be closed Monday and Tuesday to mark the Muslim Id al-Fitr holiday.

For the week ahead, trade is tipped to move within a narrow, choppy range between MYR2,920-MYR3,000/ton in holiday-thinned trade as some traders may stay away from their desk for Id celebrations.

Weather events in the region could underpin prices of palm oil, said a physical market broker in Kuala Lumpur. A developing El Nino weather event, usually associated with limited rainfall and hot, dry weather in Southeast Asia--the world's top producer of rubber, palm oil and rice--could lift prices of the commodities as reduced yields limit supply.

In the cash market, refined palm olein for October/November/December was traded at $960/ton, free on board Malaysian ports, said a Singapore-based physical market broker.

Open interest on the BMD was 114,968 lots, versus 116,462 lots Thursday. One lot is equivalent to 25 tons.

A total of 32,367 lots of CPO were traded versus 30,017 lots Thursday.

 
Ending BMD CPO futures prices in MYR/ton: 
 
Month   Close  Previous  Change   High    Low 
Sep'12  2,898     2,860     +38  2,902  2,866 
Oct'12  2,928     2,910     +18  2,943  2,905 
Nov'12  2,962     2,942     +20  2,973  2,938 
Dec'12  2,985     2,976      +9  2,994  2,964
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