KUALA LUMPUR, Sept 26: Malaysian crude palm oil futures rose 1.5 per cent on Friday as investors took up positions ahead of the holidays next week, but traders said the outlook for the tropical oil remained cloudy.

Prices of palm oil have fallen about 25 per cent this year, dragged down by upswings in production in top producers Malaysian and Indonesia, defaults by Asian consumers and Jakarta cutting its export taxes amid roiling financial markets.

The most-active December contract on the Bursa Malaysia Derivatives Exchange closed up 33 ringgit at 2,313 ringgit ($674) per ton.

More traders are taking positions ahead of the holidays rather than squaring them as crude oil is generally expected to gain but domestic factors of weak exports and strong production are still a problem, said a trader with a local commodities broker.

Mainly Muslim Malaysia will celebrate Eid al-Fitr Oct. 1-2 to mark the end of the Islamic fasting month of Ramadan. All financial markets will be closed on those days.

Other traded months rose between 10 and 60 ringgit while Sept 2009 and March 2010 contracts were unchanged.

Overall trade stood at 10,628 lots of 25 tons each.

Export trends for Malaysian palm oil are dismal. Cargo surveyors have reported up to 14 per cent declines for palm shipments Sept. 1-25, which are now less than 1 million tons.

Traders now expect production to rise by at least 8 per cent as plantation firms try to speed up harvesting before the Eid-ul-Fitr holidays.

Oil fell $3 on Friday as concerns about financial market turmoil increased after talks between US lawmakers over a $700 billion bailout package to mop up toxic debt stalled. [O/R] U.S soyaoil for October delivery fell 0.6 per cent but the most-active Jan. 2009 soyabean oil contract on the Dalian Commodity Exchange inched up nearly 1.1 per cent.

Indonesian palm oil markets were lacklustre with very few producers holding auctions.The state marketing centre in Jakarta did not hold any palm oil auctions.

The centre, which sells palm oil from state plantations, will be closed Sept. 29-Oct. 6 for the Eid al-Fitr holidays.

Producers in Medan, North Sumatra -- home to Belawan port, Indonesia’s key port for palm oil exports -- also did not hold any auction.

Holidays are approaching. Besides, we can’t deliver palm oil because the roads are closed during the holidays, said a dealer in Medan.

PT Astra Agro, Indonesia’s largest listed plantation was the only company holding auctions on Friday.

In Malaysia’s physical market, crude palm oil for September and October shipments in the southern region were at 2,320/2,330 ringgit. Trades were not called by the end of the trading session.---Reuters