23/12/2011 (Reuters) - Malaysian crude palm oil futures rose to a near two week high on Thursday as traders focused more on heavy rains potentially disrupting production than fixating on concerns of euro zone debt crisis eroding global economic growth.

Financial markets in Asia are keeping an eye out on how much of the funds raised from an inaugural long-term European Central Bank tender will actually flow into euro zone economies and help restore much-needed investor confidence.

Palm oil is 18 percent down this year so far, weighed down by gloomy economic outlook driven by euro zone debt crisis  although strong fundamentals like wet weather have helped cap losses.

"The market has shifted from demand driven to output driven. There's short covering on weather vagaries," said a trader with a local commodities brokerage, referring to the heavy local rain fall as well as the La Nina weather pattern.

Benchmark March palm oil futures rose 0.8 percent on the Bursa Malaysia Derivatives Exchange to close at 3,097 ringgit ($980) per tonne, a level last seen on Dec. 9.

Traded volumes stood at 23,013 lots of 25 tonnes each, a tad thinner than the usual 25,000 lots as some investors were closing out positions ahead of the year-end. 

Top palm oil producer Indonesia has kept its export tax for crude palm oil at 15 percent for January, unchanged from previous month, an industry ministry official said on Thursday.

On the weather front, the Malaysian Meteorological Department kept its earlier warning of heavy rains that may last till Thursday in Johor, a key oil palm growing state that accounts for a fifth of national output.

"Weather play is still in everyone's mind, that's why you see a slight upside," said another dealer with a foreign commodities brokerage.

"I heard the roads towards the palm oil plantations were bad, but there was no reported flood," the dealer added.

Production is already easing partly due to seasonally weaker yields but exports from Malaysia are also falling, giving some breathing space to palm oil stocks that have started to tighten a little.

Cargo surveyor data showed Malaysian palm oil exports for the first 20 days of December fell by 10 percent, as top buyers such as India and China slow orders before the year end.

Brent futures were steady above $107 a barrel on Thursday, as investors weighed a sharp drop in U.S. crude stocks against persistent worries the euro zone debt crisis would curtail global oil demand.

U.S. soyoil for January delivery edged up 0.3 percent on concern over dry weather hurting South American soy yields.

The most active Sept 2012 soyoil contract on China's Dalian commodity exchange gained 0.4 percent.

"The Dalian market is entering a pretty flat phase right now," said Zhang Ru Ming, research manager with Dalian-based Liang Yun Futures.

"For first quarter next year, we would be looking at the South American weather to see how it would affect the market," he added.  

Palm, soy and crude oil prices at 1004 GMT
                                                                  
  Contract                   Month     Last    Change     Low    High  Volume
  MY PALM OIL            JAN2     3095    +21.00    3082    3097     235
  MY PALM OIL           FEB2     3100    +25.00    3072    3100    2165
  MY PALM OIL           MAR2     3097   +25.00    3065    3097   11174
  CHINA PALM OLEIN  MAY2     7882   +54.00    7826    7894   96910
  CHINA SOYOIL          SEP2     8876   +36.00    8834    8896  310006
  CBOT SOY OIL          JAN2     49.58    +0.13    49.33   49.71    6384
  NYMEX CRUDE         FEB2     99.22    +0.55     98.55   99.39   10481
                                                                  
  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 = 3.1625 ringgit)