28/12/2012 (Reuters) - Malaysian palm oil futures climbed to a five-week high on Thursday on expectations for stronger demand and as monsoon-driven floods in the country's key producing regions sparked concerns of supply disruptions.

Malaysian crude palm oil cargoes are likely to be cheaper than rival Indonesia's with the former setting its January export tax rate at zero compared to the latter's 7.5 percent.

The price advantage could spur demand for Malaysian crude palm oil at a time when production is seasonally lower and faces potential disruption from heavy rains, lifting hopes that record stocks could come down after driving down prices by 22 percent this year.

"The gains today are mostly headline driven with the flood news and all that, although it (the flood) has been easing a bit after Christmas," said a dealer with a foreign commodities brokerage in Malaysia.

"There has also been active buying of palm as traders attempt to narrow its price gap to soybean oil at around a $280 per tonne level."

The benchmark March contract on the Bursa Malaysia Derivatives Exchange rose to 2,484 ringgit ($810) per tonne -- the highest level seen since Nov. 20 -- before settling at 2,479 ringgit, two percent higher than previous day's close.

Total traded volumes stood at 37,912 lots of 25 tonnes each, higher than the usual 25,000 lots.

Technical analysis showed that palm oil is expected to end the current rebound around 2,615 ringgit and fall to its Dec. 13 low of 2,217 ringgit over the next three months.

Malaysian palm oil futures are expected to recover in the first quarter of next year even after the market faces its biggest yearly loss since 2008 on expected stronger demand for crude palm oil.

Exports in the first 25 days of December rose as much as 3 percent due to bigger purchases from India, the world's top edible oil importer, and the United States, cargo surveyor data showed. Brent crude oil slipped below $111 a barrel as nervous investors watched talks to avert a U.S. budget crisis that could push the world's biggest economy back into recession.

In other competing vegetable oil markets, U.S. soyoil for January delivery rose 0.9 percent in late Asian trade on expectations of strong Chinese food demand. The most active May 2013 soybean oil contract on the Dalian Commodity Exchange rose 0.5 percent.   

  Palm, soy and crude oil prices at 1006 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      JAN3    2350   +42.00    2299    2350     703
  MY PALM OIL      FEB3    2434   +48.00    2386    2435    4099
  MY PALM OIL      MAR3    2479   +49.00    2424    2484   16605
  CHINA PALM OLEIN MAY3    7016  +130.00    6848    7018  941560
  CHINA SOYOIL     MAY3    8634   +40.00    8524    8636  692036
  CBOT SOY OIL     MAR3   49.19    +0.49   48.51   49.21    5617
  NYMEX CRUDE      FEB3   91.22    +0.24   90.75   91.35   12901

  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=3.061 ringgit)