18/08/2012 (Reuters) - 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 Eid al-Fitr next week, which concludes the fasting month of Ramadan.

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.

Malaysia's palm oil exports staged a tentative recovery for the first half of the month, thanks to higher shipment to major food buyers China and India, according to cargo surveyor data.

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 U.S. Midwest, which could have a better chance for rain next week, an agricultural meteorologist said.

The worst drought in more than half a century had raised fears of tighter supplies of soybean and beanoil, shifting more vegetable oil demand to the cheaper palm oil.

Brent crude oil fell to around $114 on Friday after the United States said it was considering the possible release of oil reserves to dampen prices and the Israeli president spoke out against any lone Israeli attack on Iran.

In other vegetable oil markets, the most active U.S. 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.   

  Palm, soy and crude oil prices at 1003 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      SEP2    2898   +38.00    2866    2902    1215
  MY PALM OIL      OCT2    2928   +18.00    2905    2943    7685
  MY PALM OIL      NOV2    2962   +20.00    2938    2973   18803
  CHINA PALM OLEIN JAN3    7814   +92.00    7752    7858  413684
  CHINA SOYOIL     JAN3    9690   +24.00    9660    9726  349936
  CBOT SOY OIL     DEC2   53.78    +0.12   53.51   53.85    3551
  NYMEX CRUDE      SEP2   95.16    -0.44   94.98   95.48   14272

  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil and RBD palm olein in Chinese yuan per tonne
  Crude in U.S. dollars per barrel
  ($1=3.13 ringgit)