20/02/2013 (Reuters) - Malaysian palm oil futures edged higher on Tuesday, tracking gains in soybeans after disappointing rains in Argentina raised the prospect of a smaller crop.

U.S. soybeans rose to a one-week high, resuming trading after the President's Day holiday, as rain that had been expected to bring relief to wilting Argentine soybean crops over the weekend proved to be lighter than expected.

A smaller soybean crop for crushing into soybean oil may shift more demand to competing palm oil that trades at a steep discount of almost $300 per tonne.     

"There was news of much less rain received than expected in Argentina this week, and Chinese players are also positive after coming back from the Lunar New Year break," said a Singapore-based trader with a regional commodities house.

The benchmark May contract on the Bursa Malaysia Derivatives Exchange rose 1.1 percent to close at 2,565 ringgit ($827) per tonne. Prices traded in a range of 2,550 to 2,575 ringgit.

Total traded volumes stood at 33,012 lots of 25 tonnes each, higher than the typical 25,000 tonnes.

Technicals showed Malaysian palm oil is expected to rise to 2,593 ringgit per tonne, as indicated by a rising wedge, said Reuters market analyst Wang Tao.

Traders are awaiting the Malaysian Feb. 1-20 palm export data due on Wednesday, after rising shipments in the first half of the month raised hopes for stocks to ease further.

Malaysia's January palm oil stocks inched down 1.9 percent from a month ago to 2.58 million tonnes, the first drop since last June.

Industry players are also expecting stronger export demand for crude palm oil this month as exporters take advantage of February's zero percent tax before it rises to 4.5 percent in March.   

Brent crude edged lower towards $117 per barrel on Tuesday, adding to losses across the previous three sessions, with traders waiting for U.S. data to provide clues to growth in the world's largest oil user, besides weekend elections in Italy.

Other competing vegetable oil markets also gained on Argentine soy crop worries. The most active U.S. soyoil for May delivery gained 1 percent in late Asian trade. The most active September soybean oil contract on the Dalian Commodity Exchange edged up 0.7 percent.     

  Palm, soy and crude oil prices at 1003 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      MAR3    2507   +33.00    2488    2510     300
  MY PALM OIL      APR3    2541   +30.00    2525    2548    8596
  MY PALM OIL      MAY3    2565   +29.00    2550    2575   16639
  CHINA PALM OLEIN SEP3    7118   +66.00    7064    7130  384710
  CHINA SOYOIL     SEP3    8710   +58.00    8650    8724  351732
  CBOT SOY OIL     MAR3   52.13    +0.51   51.63   52.15    6713
  NYMEX CRUDE      MAR3   95.55    -0.31   95.25   95.99   23574

  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=3.102 ringgit)