04/11/2011 (Business Recorder) - Malaysian palm oil futures rose to a near one-week high on Thursday, as expectations of lower Southeast Asian output buoyed prices late in the session, with uncertainty surrounding the eurozone debt crisis capping gains.

Benchmark January palm oil futures on the Bursa Malaysia Derivatives Exchange ended 0.6 percent higher at 2,976 Malaysian ringgit ($950) a tonne after going as high as 2,978 ringgit.

Traded volumes for the January palm contract were thin at 9,386 lots of 25 tonnes each, compared with 12,369 lots on Wednesday.

"Seasonally we now move into lower production months from November to January, which is very positive for the crude palm oil market," said a Kuala Lumpur-based trader.

"Production will taper off with weather calamities - rain - around the corner."

Benchmark palm prices have gained as much as 9.2 percent since hitting a multi-month low at 2,754 ringgit in early October, partly on expectations of lower output in Southeast Asia due to the onset of the rainy season.

The rainy season for more than a third of Indonesia, the world's top palm oil producer, began in October, while it will start this month for another third of the vast archipelago, the state weather agency said in September.

"For palm fundamentals, they are looking quite good," said a second Kuala Lumpur-based palm trader.

"The weather factor is coming - in Malaysia it's raining every week." In addition, La Nina-driven heavy rains at the end of the year could also coincide with the monsoon season, stalling harvesting and supporting palm oil futures that have lost around 20 percent so far this year.

Production currently appears to be strong with traders expecting Malaysian palm oil stocks to record an increase despite the strong export data reported for October.