27/11/2010  (Business Recorder) - Malaysian palm oil futures slipped on Friday as a stronger dollar prompted some profit taking although concerns over monsoon rains hurting output curbed losses. Strong China demand for US soyabeans, which are crushed into oils, supported vegetable oil markets amid the government's call for banks to support the agriculture sector facing shortages in corn and other crops.

The benchmark February 2011 crude palm oil contract on the Bursa Malaysia Derivatives Exchange settled down 0.1 percent to 3,274 ringgit ($1,045) per tonne. The market jumped to its highest in three days the previous day. Traded volume stood at 12,214 lots of 25 tonnes each. "Palm oil is just drawing back a little on profit taking because of the stronger dollar and since the market rose a little too high the day before," said a trader with a local commodities brokerage.

The dollar rose to a seven-week high of 83.89 yen on Friday, with fresh sabre-rattling by North Korea helping the US currency. A stronger dollar makes exports of palm oil priced in the greenback and other US commodities expensive for buyers holding other currencies.

But palm oil demand has been recovering with cargo surveyors reporting up to 24.9 percent rise in Malaysian exports for November 1-25 from a month ago. Demand appears to be picking up at a time when the monsoon rains hit Malaysia, the second largest palm oil producer. The Malaysian weather office said the La Nina weather condition made the rains heavier and plantation officials expect yield quality of the palm fruits to go down. US soyaoil for December delivery fell 0.8 percent in Asian trade after Thanksgiving holiday the previous day.

The most-active September soyaoil contract on the Dalian Commodities Exchange fell 1.6 percent in part due to the exchange raising margin requirements on soya meal and soya oil to 7 percent from close of business on November 23, and the daily trading limit to 5 percent. Oil, which provides direction to vegetable oils due to their growing use in the biofuel sector, fell on Friday as ongoing concerns about a wider debt crisis in Europe, China's inflation and tensions in Korea pushed up the dollar.