03/11/2011 (Reuters) - Malaysian palm oil futures climbed 1.2 percent on Wednesday as traders looked to a developing La Nina weather pattern that could curb production of the tropical oil.

La Nina-driven heavy rains at the end of the year could coincide with the monsoon season, stalling harvesting and supporting palm oil futures that have lost almost 22 percent so far this year.

"We are in a weather market for sure. The southeast Asian region has been getting more rains than usual and this will keep the palm oil market supported in the short term," said a trader with a foreign commodities brokerage.

Benchmark January palm oil futures FCPOc3 on the Bursa Malaysia Derivatives Exchange settled up 1.2 percent at 2,958 ringgit ($948) a tonne after going as high as 2,966 ringgit.

Overall traded volumes stood at 23,130 lots at 25 tonnes each, compared to the usual 25,000 lots.

For now, production appears to be strong with traders expecting Malaysian palm oil stocks to record an increase despite the strong export data reported for October.

But La Nina rains will curb production and force refiners to run down stocks to meet regular orders. 

"For now Sabah is not affected by the heavy rains," said a planter in Malasyia's key oil palm growing state on Borneo island. "But I heard that it is not so great in peninsula Malaysia, they are expecting floods."

Indonesian government officials cancelled a meeting with their Malaysian counterparts this week to discuss a highly anticipated review on export taxes on crude palm oil, creating more uncertainty in the industry.

"It's most likely to take place at the end of November," said a Malaysian government official who declined to be named. "We hope there will be no further delay."

Malaysia, the world's No 2 producer, says its refiners are suffering a price disadvantage after Jakarta slashed refined palm oil export duties and tariffs for the crude grade to keep more of the feedstock in Indonesia for processing.

Related markets were up.

Brent crude bounced on Wednesday after three days of losses, supported by hopes that the Federal Reserve may hint at more measures to boost the U.S. economy, though it was seen vulnerable to euro zone debt worries. 

U.S. soyoil for December delivery also reversed losses in Asian trade although global economic concerns and the rapid harvest of soybeans weighed. China's most active May 2012 soybean oil contract edged higher.

"The soyoil market is more or less flat today. fundamentally there are not many influencing factors right now," said Zhang Ruming, research manager at Liangyun Futures.

"But most investors will probably look out for the outcome of the parliamentary confidence vote in Greece this Friday," he said, referring to the shock move by Greece to hold a referendum on its bailout package. 

Palm, soy and crude oil prices at 1011 GMT
                                                                  
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      NOV1    2965   +40.00    2960    2970      67
  MY PALM OIL      DEC1    2962   +37.00    2923    2965    2004
  MY PALM OIL      JAN2    2958   +35.00    2922    2966   12369
  CHINA PALM OLEIN MAY2    8010   +54.00    7844    8020  119908
  CHINA SOYOIL     MAY2    9268   +52.00    9100    9274  454354
  CBOT SOY OIL     DEC1   51.13    +0.33   50.41   51.25    6458
  NYMEX CRUDE      DEC1   92.54    +0.35   90.97   93.20   20654
                                                                  
  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 = 3.120 ringgit)