24/12/2012 (Reuters) - Malaysian palm oil futures climbed to a near one-month high on Monday as investors pinned hopes on next year's tight supply of competing soyoil shifting food demand to the tropical oil.

Record palm oil stocks in Malaysia, the world's No.2 producer, and slowing global demand has weighed on the market that has fallen 23 percent this year.

Palm oil has widened its discount to soyoil, potentially drawing in more demand from big Asian consumers like India next year as soy-exporting South American faces tighter supply from adverse weather.

"For Q1 2013 we anticipate soybean supply to be tight albeit China cancelling, so that deficit can only be covered by palm oil," said a trader with a local commodities brokerage.

"South America must produce and if they fail, then attention will turn to palm oil," the trader added.

The benchmark March contract on the Bursa Malaysia Derivatives Exchange rose 1 percent to close at 2,431 ringgit ($794) per tonne. Prices earlier climbed to 2,437 ringgit per tonne, the highest level since Nov. 27.

Total traded volumes stood at 18,637 lots of 25 tonnes each, much lower than the usual 25,000 lots ahead of Christmas holidays.

Technical analysis showed that palm oil is expected to gain more to 2,482 ringgit per tonne as it has cleared resistance at 2,419 ringgit, said Reuters market analyst Wang Tao.

Seasonally slowing output and a growing biodiesel demand from Europe could help prop up palm oil prices in the first quarter of next year.

"From a fundamental point of view, palm should be supported by yield getting thinner and also emerging demand not only from the usual suspects, but Europe as well," said Standard Chartered analyst Abah Ofon in Singapore.

"On one hand European refiners are looking to buy crude palm oil because of the good discount between gasoil. That's making crude palm oil attractive as a feedstock for biodiesel," Ofon added.

Brent crude fell for a third day on Monday, trading below $109 a barrel, as uncertainty over the ability of the United States to resolve a budget crisis before a year-end deadline stoked concerns about demand growth in the world's top oil consumer.

In other competing vegetable oil markets, U.S. soyoil for January delivery fell 0.1 percent in late Asian trade after earlier gains on bargain hunting as prices slid on China's record cancellation.

Last Friday, China cancelled 540,000 tonnes of U.S. soybeans -- the biggest cancellation by the world's top importer of the oilseed in at least 14 years -- as it expects to book cheaper supplies from Brazil next year.

The most active May 2013 soybean oil contract on the Dalian Commodity Exchange closed 0.1 percent higher.

  Palm, soy and crude oil prices at 1005 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      JAN3    2300   +17.00    2284    2305     274
  MY PALM OIL      FEB3    2377   +26.00    2358    2384    2798
  MY PALM OIL      MAR3    2431   +23.00    2411    2437    8325
  CHINA PALM OLEIN MAY3    6842   +42.00    6840    6946  757034
  CHINA SOYOIL     MAY3    8618   +12.00    8616    8700  428390
  CBOT SOY OIL     MAR3   49.07    -0.05   48.93   49.49    5380
  NYMEX CRUDE      FEB3   88.54    -0.12   88.44   88.86    4783

  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=3.063 ringgit)