* Unfavourable weather in U.S. and India provides palmsupport
* Indonesia may cut CPO export tax to zero in October
* Indonesia’s draft plantation bill hits presidential hurdle

(Updates closing prices, adds additional details)

By Michael Taylor JAKARTA, Sept 8 (Reuters) – Malaysian palm oil futures hittheir highest in nearly three weeks on Monday, on concerns aboutunfavourable weather in comparative oil-producing countries andas traders cited nervousness in an oversold market.

By the close, the benchmark November contract onthe Bursa Malaysia Derivatives Exchange had gained 0.8 percentto 2,042 ringgit ($643) per tonne, after hitting 2,068 ringgit,its highest since Aug. 21, earlier in the day.

Traded volume stood at 59,626 lots of 25 tonnes each, abovethe daily average of 35,000 lots.

“There is talk of some early frost coming in the UnitedStates,” said a Kuala Lumpur-based trader with a foreigncommodities brokerage, referring to forecasts for potentiallyunfavourable weather in parts of key corn and soy growingregions in the United States.

Floods in India, the world’s fifth-biggest producer ofsoybeans, also supported sentiment for palm oil, the traderadded.

“Our market has already gone so low – for both soy and palm- any kind of bullish fundamental changes will tend to have aknee-jerk reaction,” said a Kuala Lumpur-based trader withanother foreign commodities brokerage. “Any small trigger willcause some panic covering.”

The U.S. soyoil contract for December edged down 0.2percent in late Asian trade, while the Dalian market was closedfor the Chinese Mid-Autumn festival.

In related news, Indonesia is expected to cut its crude palmoil export tax to zero for October, industry sources in theworld’s top producer of the tropical oil said, after a similarmove by Malaysia aimed at boosting overseas sales of thecommodity amid weak demand.

“It has been taken into account in the market,” the secondtrader said on the potential for a lower export tax. “The marketis now well supported because prices have gone too low – anydisruption to supply or increase in demand will be very positivefor the market.”

Last week, benchmark palm prices touched a March 2009 low of1,914 ringgit, although traders on Monday said they were buoyedby prices remaining above the 2,000 ringgit level.

In other news, Indonesia’s president is against a draft billthat would retroactively limit foreign ownership of plantationsto no more than 30 percent, the country’s investment chief said,on concerns it may expose the government to possible legalaction.

In other markets, Brent crude fell below $100 a barrel forthe first time in 14 months as Chinese and U.S. data pointed toslower-than-expected growth in the world’s top oil consumers.

On the data front, Cargo surveyors Intertek Testing Servicesand Societe Generale de Surveillance are due to release palm oilexport data on Wednesday, with the Malaysian Palm Oil Board isalso set to release its palm oil stocks numbers.

Palm, soy and crude oil prices at 1011 GMT

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 = 3.1730 Malaysian ringgit)
($1 = 6.1400 Chinese yuan)
($1 = 60.3000 Indian rupee)

(Reporting by Michael Taylor; Editing by Subhranshu Sahu)

Source : Reuters