13/10/2011 (Reuters) - Malaysian palm oil futures climbed to a near two-week high on Wednesday, as short covering ahead of a key agriculture report from the United States lifted the market. 

The U.S. Department of Agriculture (USDA) will update its estimates of U.S. corn and soybean crops later in the day, and in the past, such reports have triggered sharp rallies by showing stocks or crops dramatically smaller than trade expectations.  

"I think a lot of people are short-covering ahead of the USDA report. The market has basically hit a bottom and also the macroeconomic view has turned from bearish to more of an uptrend lately," said a trader in Kuala Lumpur.  

"Equities have been improving so the market overall has been a bit more on the friendlier side," the trader added. 

European financial markets rose as investors looked to Slovakia to reach a deal on expanding the euro zone's rescue fund, enabling leaders to move on with efforts to tackle a worsening debt crisis.  

December palm oil futures <0#FCPO:> on the Bursa Malaysia Derivatives Exchange  settled 2.3 percent higher at 2,864 ringgit ($911) a tonne. It earlier hit 2,879 ringgit -- the highest since Sept 30.  

Traded volumes stood at  28,080 lots of 25 tonnes each compared with the usual 25,000 lots that change hands.

Reuters analyst Wang Tao said palm oil is expected to fall to 2,818 ringgit per tonne, as it faces a strong resistance at 2,863 ringgit.  

But palm oil prices rose for a third straight session in a row on Wednesday, as rising export data offset strong inventory numbers earlier this week.  

Cargo surveyor Intertek Testing Services reported a 31.8 percent jump in Malaysian palm oil exports in Oct. 1-10 to 496,918 tonnes from the same period a month ago. Crude palm oil shipments alone were up 63.3 percent.  

Top buyer China needs to restock after the national day holidays in early October and India is still buying ahead of Diwali at the end of the month. 

Buyers of Indonesian crude palm oil however, are buying Malaysian grade after Jakarta made refined palm oil export taxes lower than crude, leading to bigger than expected shipments out of Malaysia.  

Brent crude futures LCOc1 gained over $1 on Wednesday, supporting prices of other vegetable oils that are used as a feedstock in biodiesel. 

U.S. soyoil for Dec delivery dipped  in late Asian trade, after hitting a two-week high in the previous session. China's most active May 2012 soybean oil contract <0#DBY:> gained 1.4 percent. 

"The upward movement seen in the Dalian soybean market today was driven by the big gains in CBOT," Zhang Ruming, a research Manager with Liangyun Futures, in China said. 

"The USDA report tonight is also an influencing factor as traders are cautious ahead of the report," he added. 

Palm, soy and crude oil prices at 1114 GMT
                                                                                                  
  Contract                    Month     Last      Change     Low       High        Volume
  M'ASIA PALM OIL    OCT1      2850     +40.00       2850     2888        205
  M'ASIA PALM OIL    NOV1      2863     +63.00       2843     2877       1630
  M'ASIA PALM OIL    DEC1      2864     +63.00       2843     2879      13447
  M'ASIA PALM OIL    JAN2       2878     +65.00       2854     2888       7304
  DALIAN SOY OIL    MAY2       9296     +124.00    9182      9328      592306
  CBOT SOY OIL       DEC1      52.29    +0.11        51.16      52.33     12406
  NYMEX CRUDE     NOV1      86.32     +0.50       84.52      86.59      29248
                                                                                                  
  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil in Chinese yuan per tonne
  Crude in U.S. dollars per barrel