18/01/2012 (Reuters) - Malaysian crude palm oil futures bounced back on Tuesday, as concerns over dry weather that could potentially tighten soyoil supplies in Argentina and Brazil offset investor fears about the euro zone debt crisis.

Argentina's drought will worsen this week, say local meteorologists, dashing hopes that rain in the days ahead might be strong enough to revive parched corn and soy fields.

"It looks like the dry spell is back in South America, however weak technicals and still lagging exports are likely to limit the upside here," said a dealer with a foreign commodities brokerage in Malaysia.

But investors are also keeping a close watch on the euro zone debt crisis that weighed on palm oil futures, which are down 0.3 percent so far this year.

Benchmark April palm oil futures on the Bursa Malaysia Derivatives Exchange jumped 1.2 percent to close at 3,164 ringgit ($1013) per tonne. Prices dropped to 3,099 ringgit the previous day, a level last seen on Dec. 22.

"After being down by more than 100 ringgit, the market is making a retracement as it was oversold," said another trader with a foreign commodities brokerage.

Traded volumes stood at 25,785 lots of 25 tonnes each, slightly higher than the usual 25,000 lots as some traders are evening out their positions before the Lunar New Year holidays next week.

Malaysian palm oil may revisit the Jan. 3 high of 3,244 ringgit per tonne based on technical analysis, said Reuters analyst Wang Tao.

The Malaysian weather office did not issue any heavy rain warning but the market is watching closely as floods could complicate the delivery of palm oil from plantations to ports and refineries.

A slowdown in demand as top buyers, including China and India, cut back orders helped ease pressure from tightening stocks.

Malaysia's palm oil exports posted an 11 percent drop for the first 15 days in January to levels below 600,000 tonnes, said cargo surveyors Intertek Testing Services and Societe Generale de Surveillance.

But the pace of exports was stronger than the first 10 days of the month on the back of last minute imports by China before closing for the Lunar New Year holiday next week.

Palm oil exports in December for top producer Indonesia showed a similar trend of easing demand.

Export data based on ships leaving six ports on the Island of Sumatra showed December exports declined 29 percent to 1,041,491 tonnes compared to November.

Oil prices rose above $112 on Tuesday supported by a weaker dollar and on expectations of steady demand growth after China, the world's second-largest oil consumer, posted stronger-than-expected economic growth.

Other vegetable oil markets also bounced back after posting earlier losses.

The U.S. soyoil contract for March delivery jumped 1.7 percent while the most active September 2012 soyoil contract on China's Dalian commodity exchange inched up 0.8 percent.

  Palm, soy and crude oil prices at 1003 GMT
                                                                 
  Contract                 Month    Last   Change     Low    High  Volume
  MY PALM OIL          FEB2    3195   +34.00    3165    3201     836
  MY PALM OIL           MAR2    3175   +39.00    3145    3182    4312
  MY PALM OIL           APR2    3164   +38.00    3134    3173   12975
  CHINA PALM OLEIN  SEP2    7986   +64.00    7924    7990   79574
  CHINA SOYOIL         SEP2    8954   +68.00    8882    8960  259170
  CBOT SOY OIL         MAR2   51.14    +0.85   50.50   51.24    8502
  NYMEX CRUDE         FEB2  100.92    +2.22   98.60  100.97   50853
                                                                 
  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 = 3.122 ringgit)