VEGOILS-Palm oil bounces from 3-week low on U.S. drought

* U.S. dry weather weighs on global oilseed supplies
* Palm oil to rebound to 3,053 ringgit -technicals
* Coming Up: Malaysia's July 1-20 exports data; Friday

(Updates prices)
By Chew Yee Kiat
SINGAPORE, July 19 (Reuters) - Malaysian crude palm oil
futures rebounded from a 3-week low on Thursday, as the worst
drought in the United States since 1956 threatened to squeeze
global oilseed supplies further and offset slower exports and
better output in Malaysia.
Oppressive heat and a worsening drought in the U.S. Midwest
pushed grain prices near or beyond records this week and raised
concerns of a smaller supply of soybean oil, shifting more
demand to the cheaper palm oil.
"The market is staged for a rebound as drought concerns are
revived. Also, palm oil is now at a discount of over $260 to
soyoil, and that will attract arbitrage activity to narrow the
spread," said a dealer with a foreign commodities brokerage in
Malaysia.
The benchmark October palm oil futures on the Bursa
Malaysia Derivatives Exchange gained 1.7 percent to close at
3,045 ringgit ($966) per tonne after touching a low of 2,986
ringgit, a level unseen since June 28.
Traded volumes stood at 31,771 lots of 25 tonnes each,
higher than the usual 25,000 lots.
On the technicals front, palm oil will rebound to 3,053
ringgit, Reuters market analyst Wang Tao said.
Palm oil futures eased more than 100 ringgit earlier this
week as Malaysia's July 1-15 palm oil exports tumbled more than
20 percent from a month ago with stronger production expected
for the month.
Slower exports and a higher output could boost palm oil
stocks that fell to a 14-month low in June, helping to ease
concerns of tight oilseed supplies.
Market players will be watching closely for consumption
trends as cargo surveyors Intertek Testing Services and Societe
Generale de Surveillance issue export numbers for July 1-20 on
Friday.
Palm oil plantation owners in Southeast Asia are also
watching for the possibility of an El Nino weather pattern
returning to the region at the end of the year, leading to dry
weather that could hurt palm oil production.
In related market, oil rose above $106 a barrel on Thursday
to hit a seven-week high as a rise in tension in the Middle East
brought supply concerns back into focus.
In other vegetable oil markets, the most active U.S. soyoil
for December delivery fell 0.6 percent by 1005 GMT and
the most active January 2013 soyoil contract on the
Dalian Commodity Exchange closed 0.4 percent higher.

Palm, soy and crude oil prices at 1004 GMT

Contract Month Last Change Low High Volume
MY PALM OIL AUG2 3025 +55.00 2974 3025 502
MY PALM OIL SEP2 3040 +58.00 2981 3047 5615
MY PALM OIL OCT2 3045 +52.00 2986 3056 19407
CHINA PALM OLEIN JAN3 8052 -30.00 8008 8100 419540
CHINA SOYOIL JAN3 9820 +40.00 9758 9838 564358
CBOT SOY OIL DEC2 55.17 +0.32 54.65 55.29 7819
NYMEX CRUDE AUG2 90.85 +0.98 89.86 90.87 9167

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=3.145 Malaysian ringgit)

(Editing by Niluksi Koswanage)