06/07/2012 (Reuters) - Malaysian crude palm oil futures rose to the highest in more than five weeks on Thursday, as investors anticipated a dry-weather rally would continue after U.S. markets reopened from a holiday.

Futures edged down slightly in the morning session as traders turned cautious ahead of the European Central Bank's policy decision due later in the day.

But prices picked up after the midday break as a persistent drought in the U.S. Midwest that has damaged soybean crops, leading to a smaller supply of soybean oil, could mean higher demand for the tropical oil.

"Traders are trying to take positions before the U.S. markets reopen," said a Singapore-based trader with a foreign commodities house.

Benchmark September palm oil futures on the Bursa Malaysia Derivatives Exchange rose 1.4 percent to close at 3,164 ringgit ($1,001) per tonne. Prices earlier touched a high of 3,177 ringgit, a level unseen since May 29.

Traded volumes stood at 34,937 lots of 25 tonnes each, much higher than the usual 25,000 lots, on increased hedging activities.

"The market is a little overbought technically and we see some initial profit-taking. Fundamentally, end-stocks in Malaysia are tight while weather remains hot and dry in the U.S. Midwest," said another trader with a local commodities brokerage in Malaysia.

"Demand is also good with the current discount between palm olein and soybean oil."

Traders anticipate more vegetable oil demand shifting to cheaper palm oil on tighter global oilseed supply and buying ahead of the Muslim fasting month beginning in the third week of July.    

Malaysia's palm oil exports rose in June from a month ago, according to cargo surveyor data. 

Higher exports, together with weaker production growth,  could pile further pressure on Malaysia's stocks, which fell to a 13-month low in May.

Industry regulator Malaysian Palm Oil Board (MPOB) will issue official data on stocks and output for June on Tuesday.

Oil prices jumped on Thursday as Norway's state oil major Statoil said it would start shutting down production at its North Sea fields after its dispute with the unions over pensions hit a deadlock.

In other vegetable oils markets, the most active January 2013 soyoil contract on the Dalian commodity exchange edged up 0.1 percent, after touching a near two-month high on U.S. weather concerns.

The U.S. market was closed for the Independence Day holiday.

  Palm, soy and crude oil prices at 1015 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      JUL2    3120   +26.00    3062    3120      59
  MY PALM OIL      AUG2    3150   +40.00    3089    3158     745
  MY PALM OIL      SEP2    3164   +42.00    3095    3177   23573
  CHINA PALM OLEIN JAN3    8222   +16.00    8166    8262  318602
  CHINA SOYOIL     JAN3    9778   +34.00    9692    9802  555356
  CBOT SOY OIL     DEC2   53.88    +0.00    0.00    0.00       0
  NYMEX CRUDE      AUG2   88.21    +0.55   86.50   88.77   64318

  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=3.16 Malaysian ringgit)