20/12/2011 (Reuters) - Malaysian crude palm oil futures rose on Monday as investors grew concerned over hot weather hurting the South American soy crop, which could potentially limit global supplies of edible oil. 

Gains were still muted on a sell-off in Asian financial markets, driven by worries of instability in the unpredictable state of North Korea and its nuclear programme after the death of leader Kim Jong-il, announced on Monday. 

Traders said financial markets' focus on Kim Jong-il's death could shift back to possible credit rating downgrades of several European countries that could disrupt progress in resolving the debt crisis and stall global economic growth.  

"There is some spillover from equities markets' downtrend into palm oil. Eventually, the market will also have to turn back to its own fundamentals of slowing exports and production," said a trader with a foreign commodities brokerage. 

Benchmark March palm oil futures on the Bursa Malaysia Derivatives Exchange settled up 1.2 percent at 3,020 ringgit ($950). 

Traded volumes stood at 16,811 lots of 25 tonnes each, compared with the usual 12,500 lots on investor caution over the possible tensions in the Korean peninsula and Europe downgrade fears. 

Malaysia's weather office raised its weather warning to orange, saying heavy rains would continue until Thursday in parts of the key oil palm growing state of Johor that accounts for almost a fifth of national output.

Seasonally weaker yields and monsoon rains in No.2 producer Malaysia have brought production in the first fifteen days in December lower by 14.5 percent, traders and planters said.

That signals overall production this month will go well below the 14.8 percent decline seen in November, possibly propping up prices that have fallen more than 21 percent so far this year.

But exports from Malaysia are also falling as top buyers slow orders before the year end, freeing up some space for palm oil stocks that have started to tighten a little.  

Cargo surveyors will report Dec. 1-20 export data on Tuesday. The market says exports during this period may have fallen about 11 percent to 920,000 tonnes from 1.04 million tonnes in Nov 1-20.

Brent crude futures fell below $103 on Monday, as ongoing concerns over the euro zone debt crisis and the prospect of regional instability after the death of North Korea's leader weighed on riskier assets.

U.S. soyoil for January delivery climbed 0.8 percent in Asian trade on concerns of dry weather in parts of Brazil and Argentine raised concerns of tight supply.

Intially the market fell on higher U.S. dollar clouding the appeal of U.S. priced commodities. 

The most active Sept 2012 soyoil contract on China's Dalian commodity exchange also rose. 

  Palm, soy and crude oil prices at 1029 GMT
                                                                      
  Contract                    Month    Last   Change     Low    High  Volume
  MY PALM OIL            JAN2    3017   +31.00    2990    3018     340
  MY PALM OIL           FEB2    3020   +35.00    2986    3022    4136
  MY PALM OIL           MAR2    3020   +36.00    2984    3020   10092
  CHINA PALM OLEIN MAY2     7828   +16.00    7790    7882  118534
  CHINA SOYOIL         SEP2     8852   +88.00    8794    8866  383438
  CBOT SOY OIL         JAN2    49.88    +0.33   49.45   50.05    7018
  NYMEX CRUDE         JAN2    93.98    +0.46   92.54   94.33    7457
                                                                     
  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 = 3.1780 ringgit)