VEGOILS-Palm oil rises but Euro zone concerns remain

JAKARTA (Dec 16): Malaysian crude palm oil futures rose more than 1
percent on Friday, rebounding from the previous day's six-week lows on
rising equity markets, traders said, although they expected further
losses on euro zone debt worries.

Asian shares rose and the euro edged higher on Friday, as signs of
strength in the U.S. economy temporarily broke through gloom over the
European debt crisis that had driven a sell-off in riskier assets over
the past three days.

U.S. stocks rose modestly on Thursday, after a fall in U.S.
unemployment, a stronger-than-expected rise in regional factory activity
and better-than-forecast results from FedEx Corp painted an improving
picture of the economy.

By midday, the benchmark March palm oil futures on the Bursa Malaysia
Derivatives Exchange added 1.1 percent to 3,003 Malaysian ringgit
($940). "Weekend covering," said a Kuala Lumpur-based palm trader
said about Friday's gains.

"Positive regional equity markets and short-term technicals showing signs of recovery."

Earlier this week, prices touched a six-week low of 2,971 ringgit and are down almost 3 percent for the week. T

raded volumes for the February palm contract were at 3,882 lots of 25
tonnes each, compared with a three-week high at 16,016 on Thursday.
Investors said the monsoon season in top Southeast Asian countires was
also offering some support, with expectations of declining output.

Among comparable oils, Chicago soybeans rose around half a percent on
Friday, gaining for a second straight day on concerns over dry weather
in South America, which is likely to boost demand for U.S. beans.

China's most active Sept 2012 soybean oil contract <0#DBY:>
also traded in positive territory. Brent crude futures rose above
$104 on worries about supply disruption after the U.S. Congress approved
a bill imposing sanctions on Iran's central bank, limiting buyers'
ability to pay for the oil they buy from the Islamic Republic.

But the backdrop of European debt worries refused to go away.
"The market seems to be driven by the Europe debacle, rather than
fundamentals," said a second Kuala Lumpur trader. "With funds pulling
back from global commodity exposure, brace yourself for more volatility
and price swings."- Reuters