02/11/2012 (Reuters) - Malaysian palm oil futures climbed on Thursday as strong Chinese demand for soybeans fuelled expectations for more edible oil orders in coming weeks.

Signs of strong China demand have been increasing, with economic data on Thursday showing Chinese private sector factories were at their busiest in eight months in October.

Malaysia's palm oil exports last month were at their highest in a year, driven by a steady flow of Chinese orders as well as strong European demand.

Prices of palm oil have dropped 20 percent so far this year mainly thanks to record stocks. Although cheaper palm oil cargoes have spurred demand, production has risen at a faster pace and could lead to record stocks again in October.

"The question is whether exports can override the burden of the production. If demand is sustained or rises higher, at least the stocks won't be so bad. People are very worried," said a trader with a foreign commodities brokerage.

At the close, the benchmark January contract on the Bursa Malaysia Derivatives Exchange had risen 1.6 percent to 2,537 ringgit ($831) per tonne.

Total traded volumes stood at 33,160 lots of 25 tonnes each, higher than the usual 25,000 lots.

Technicals showed palm oil is still targeting 2,468 ringgit per tonne, as the current fall from 2,615 ringgit is expected to reverse the rebound from the Oct. 3 low of 2,230 ringgit, said Reuters market analyst Wang Tao.

Surging palm oil output from Southeast Asia led to inventory levels in Malaysia, the world's No.2 producer, hitting a record 2.48 million tonnes in September.

Traders expected October end stocks to reach about 2.6-2.7 million tonnes given that production last month would have been a seasonal peak.

In a bullish sign for palm oil, Brent crude hovered around $108.50 a barrel on Thursday as investors focused on concerns that storm Sandy's rampage across the U.S. East Coast could reduce fuel demand.

In other vegetable oil markets, U.S. soyoil for December delivery inched up 0.8 percent in late Asian trade on China demand hopes.

The most-active May 2013 soybean oil contract on the Dalian Commodity Exchange closed 0.9 percent higher.   

  Palm, soy and crude oil prices at 1010 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      NOV2    2404   +10.00    2389    2410      82
  MY PALM OIL      DEC2    2467   +22.00    2455    2473    3212
  MY PALM OIL      JAN3    2537   +41.00    2508    2541   17740
  CHINA PALM OLEIN MAY3    7074   +78.00    7024    7106  331110
  CHINA SOYOIL     MAY3    9118   +88.00    9050    9142  459344
  CBOT SOY OIL     DEC2   50.56    +0.40   50.10   50.91    9525
  NYMEX CRUDE      DEC2   86.42    +0.18   85.92   86.59   15306

  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 = 3.0510 ringgit)