* S.American soy crop weather supporting palm oil * Kim Jong-il's death adds to euro zone-driven sell-off in mkts * Malaysian production seen down 14.5 pct for Dec 1-15 * Cargo surveyors to report Malaysian 1-20 exports on Tuesday (Adds details, quotes) By Niluksi Koswanage KUALA LUMPUR, Dec 19 (Reuters) - Malaysian crude palm oil futures edged higher on Monday as investors grew concerned over hot weather hurting the South American soy crop, which could potentially limit global supplies of edible oil. Gains were limited on an emerging sell-off in Asian financial markets, driven by worries of instability in the unpredictable state of North Korea and its nuclear programme after the death of leader Kim Jong-il, announced on Monday. Traders said financial markets' focus on Kim Jong-il's death could shift back to possible credit rating downgrades of several European countries that could disrupt progress in resolving the debt crisis and stall global economic growth. "There is some spillover from equities markets' downtrend into palm oil. Eventually, the market will also have to turn back to its own fundamentals of slowing exports and production," said a trader with a foreign commodities brokerage. By the midday break, benchmark March palm oil futures <0#FCPO:> on the Bursa Malaysia Derivatives Exchange were up 0.3 percent higher at 2,992 ringgit ($940) but off the level of 3,015 ringgit struck earlier. Traded volumes stood at 7,278 lots of 25 tonnes each, compared with the usual 12,500 lots on investor caution over the possible tensions in the Korean peninsula and Europe downgrade fears. Malaysia's weather office raised its weather warning to orange, saying heavy rains would continue until Thursday in parts of the key oil palm growing state of Johor that accounts for almost a fifth of national output. Seasonally weaker yields and monsoon rains in No.2 producer Malaysia have brought production in the first fifteen days in December lower by 14.5 percent, traders and planters said. That signals overall production this month will go well below the 14.8 percent decline seen in November, possibly propping up prices that have fallen more than 21 percent so far this year. But exports from Malaysia are also falling as top buyers slow orders before the year end, freeing up some space for palm oil stocks that have started to tighten a little. Cargo surveyors will report Dec. 1-20 export data on Tuesday. Brent crude futures fell below $103 on Monday, as the prospect of rising tension on the Korean peninsula following the death of North Korean leader Kim Jong-il pushed the U.S. dollar higher. The higher U.S. dollar weighed on U.S. soyoil for January delivery in Asian trade. Initially the market traded in positive territory as dry weather in parts of Brazil and Argentina raised concerns of tight supply. The most active Sept 2012 soyoil contract on China's Dalian commodity exchange rose. Palm, soy and crude oil prices at 0508 GMT Contract Month Last Change Low High Volume MY PALM OIL JAN2 2995 +9.00 2990 3016 111 MY PALM OIL FEB2 2995 +10.00 2986 3016 1954 MY PALM OIL MAR2 2992 +8.00 2984 3015 4185 CHINA PALM OLEIN MAY2 7798 -14.00 7790 7882 83198 CHINA SOYOIL SEP2 8802 +38.00 8794 8866 265264 CBOT SOY OIL JAN2 49.52 -0.03 49.45 50.05 4185 NYMEX CRUDE JAN2 92.71 -0.84 92.66 93.76 2637 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

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