Lunar staff - pt3 is made by using a dramen staff on the air altar, fire altar and water altar (in that order) during the Lunar Diplomacy quest. After using the staff on the earth altar, it becomes a lunar staff. After the quest is complete lunar staves can no longer be made through this process. Despite the inventory sprite looking like a plain wooden staff, it appears to be topped with an air orb when equipped.
A player enchants a lunar staff.