05/04/2012 (Business Recorder) - Malaysian palm oil futures climbed to an almost 13-month high on Wednesday, as traders continued to bet on a brighter demand outlook for palm oil following expectations of a smaller soybean crop in coming months.

The US Department of Agriculture said in a much-anticipated report on Friday that farmers would plant less soybean than expected, sending signals that global oilseed supply will tighten further and helping palm oil cross the psychological 3,500 ringgit mark.

"If you are talking about an extraordinary leap, rather than a minor day-to-day fluctuation, it's more likely credited to the USDA report," said Selena Leong, an analyst at DMG & Partners Research in Singapore.

 "It's not so much on the absolute value (of the soybean crop) but more on the fact that it's below market expectation. It's hard to say when's the rally going to stop. It's been going strong since last Friday, how long it will last is anybody's guess, but right now it's still looking quite good."

By the midday break, benchmark June palm oil futures on the Bursa Malaysia Derivatives Exchange gained 0.6 percent at 3,555 ringgit ($1,161) per tonne. Prices went to 3,574 ringgit, a level not seen since March 9 last year.

Traded volumes stood at around 9,559 lots of 25 tonnes each, slightly lower than the usual 12,500 lots.

Buying interest for palm oil has been growing in No.2 producer Malaysia after four straight months of declines, as indicated by the stronger export numbers for March reported by cargo surveyors.

Market players have also turned their focus to Malaysian palm oil stocks, which stayed above 2 million tonnes in February, to determine the consumption and production trend for the edible oil. Stocks data for March will be released next week by industry regulator Malaysian Palm Oil Board.

Brent crude extended losses toward $124 a barrel on Wednesday after the US central bank dashed hopes of further economic stimulus, while news that Saudi Arabia is likely to keep output high in the event of a strategic stocks release also weighed.

In other vegetable oil markets, the most active US soyoil contract for May edged up 0.4 percent. China's Dalian Commodity exchange is closed for public holidays and trading will resume on Thursday.