Palm oil gains

Malaysian crude palm oil futures gained on Friday as prospects of erratic weather hurting production overshadowed renewed worries about the eurozone debt crisis. The focus is on dry weather in South America hurting soy yields and prospects of heavy Southeast Asian rains disrupting palm oil production, which is pushing palm oil prices up.
"We are lacking a new catalyst. The traders will most probably just play within the range while keeping an eye on the CBOT," said a dealer with a foreign commodities brokerage in Kuala Lumpur. Benchmark March palm oil futures on the Bursa Malaysia Derivatives Exchange rose 0.7 percent to close at 3,211 ringgit ($1,000) per tonne. The tropical oil ended the first week of the new year 1.1 percent higher.
Traded volumes on Friday stood at 18,702 lots of 25 tonnes, compared to the usual 25,000 lots. According to technical charts, the price target for palm oil remains at 3,139 ringgit per tonne, Reuters market analyst Wang Tao said. On the weather front, the Malaysian Meteorological Department upgraded its heavy rain warning from yellow stage to a more severe orange stage for parts of Sarawak, a key producing state that accounts for almost 15 percent of national palm oil output.
The weather office kept its heavy rain advisory at yellow stage for Pahang, Johor and Sabah, the other major oil palm producing states in No 2 producer Malaysia. While floods have been reported in some plantations in Sarawak, there has not been any serious disruption in production due to the floods, said a trader in Kuala Lumpur. Palm oil production in Malaysia is in the seasonally low yield phase and industry players see December's production level falling by 8 percent compared to a month ago.
A Reuters poll of seven plantation firms showed a steeper 13.9 percent decline in Malaysia's December output. Stocks for the month may fall to a five-month low of 1.95 million tonnes, according to the poll. US soyoil for January delivery slipped while the most active September 2012 soyoil contract on China's Dalian commodity exchange lost 0.4 percent.