SINGAPORE: Malaysian crude palm oil futures edged up on Thursday as traders focused more on heavy rains potentially disrupting production than fixating on concerns of euro debt crisis eroding global economic growth.
Financial markets in Asia are keeping an eye out on how much of the funds raised from an inaugural long-term European Central Bank tender will actually flow into euro zone economies and help restore much-needed investor confidence.
"The market has shifted from demand driven to output driven. There's short covering on weather vagaries," said a trader with a local commodities brokerage, referring to the heavy local rain fall as well as the La Nina weather pattern.
By the midday break, benchmark March palm oil futures gained 0.4 percent on the Bursa Malaysia Derivatives Exchange to 3,083 ringgit ($970) per tonne. It earlier touched a near two-week high of 3,089 ringgit, a level last seen on December 9.
Traded volumes stood at 6,032 lots of 25 tonnes each, much thinner than the usual 12,500 lots as some investors were closing out positions ahead of the year-end.
Top palm oil producer Indonesia has kept its export tax for crude palm oil at 15 percent for January, unchanged from previous month, an industry ministry official said on Thursday.
The Malaysian Meteorological Department kept its earlier warning of heavy rains that may last till Thursday in Johor, a key oil palm growing state that accounts for a fifth of national output.
Production is already easing partly due to seasonally weaker yields but exports from Malaysia are also falling, giving some breathing space to palm oil stocks that have started to tighten a little.
"Weather play is still in everyone's mind, that's why you see a slight upside," said another dealer with a foreign commodities brokerage.
"I heard the roads towards the palm oil plantations were bad, but there was no reported flood," the dealer added.
Cargo surveyor data showed Malaysian palm oil exports for the first 20 days of December fell by 10 percent, as top buyers such as India and China slow orders before the year end.
Brent futures were steady above $107 a barrel on Thursday, as investors weighed a sharp drop in US crude stocks against persistent worries that the euro zone debt crisis would curtail global oil demand.
US soyoil for January delivery was almost flat even though concerns persist over dry weather hurting South American soy yields.
The most active Sept 2012 soyoil contract on China's Dalian commodity exchange inched up 0.5 percent.
"The Dalian market is entering a pretty flat phase right now," said Zhang Ru Ming, research manager with Dalian-based Liang Yun Futures.
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