Palm oil extends gains on markets, output outlook

An industry regulator said palm oil production growth may not be as high as anticipated after a season of strong yields and a top official from IJM Plantations said the after effects of El Nino may slow output.

That may support palm oil futures that have fallen 21 percent so far this year on higher edible oil supply and concerns that the US and Europe debt crisis may slow economic growth.

"There appears to be some improvement in sentiment. Outlook for production is turning slightly bullish although we have to consider that we are currently having a high base for palm oil stocks," one trader with a commodities brokerage said.

The benchmark October crude palm oil contract on Bursa Malaysia Derivatives settled up 1.9 percent to 2,993 ringgit ($996) per tonne.

Overall traded volume as heavy at 30,747 lots of 25 tonnes each compared to the usual 25,500 lots, many traders came back into the market.

Chicago corn and soybean futures rose on Thursday, while wheat was steady following a 2 percent rally in the last session as the market awaited a key US government report, which is expected to be bullish on grains.

Trade expects USDA's August monthly crop report on Thursday to project a smaller US 2011 soy harvest than the government forecast in July, lending some strength to soyoil futures.

US soyoil for August delivery and the most active May 2012 soyoil contract on China's Dalian Commodity Exchange inched up 0.7 percent.

The US Department of Agriculture will release its monthly world demand and supply report at 1230 GMT, which will also provide the first survey-based estimates for corn and soybean production in the United States, the world's top exporter.

Copyright Reuters, 2011