29/03/2012 (Reuters) - Malaysian palm oil futures closed down on Wednesday as traders booked profits from a one-year high hit the previous day, although losses were limited by news of larger food imports by China and soybean crop damage in South America. 

Palm oil has gained 9.4 percent so far this year with 3,500 ringgit level within striking distance although many in the market say the run-up is too speculative.

Commodity traders are facing a choppy week as the focus turns to the U.S. Department of Agriculture's quarterly inventory report and planting forecast due on Friday.

"Market players are looking out for the USDA reports on Friday. At the same time, food demand from China is quite strong as it is replenishing its stocks," said a trader with a foreign commodities brokerage in Malaysia.

Benchmark June palm oil futures on the Bursa Malaysia Derivatives Exchange edged down 0.2 percent to close at 3,473 ringgit ($1,134) per tonne. Prices touched a more-than-one-year high level of 3,497 ringgit on Tuesday.

Traded volumes stood at 20,004 lots of 25 tonnes each, thinner than the usual 25,000 lots as investors were wary ahead of the Friday reports.

A healthy demand outlook for palm oil was supported by the latest Malaysian export data, which pointed to a moderate improvement in exports for the first 25 days of March.

Traders are expecting March exports to be higher than February, registering a first month-on-month increase since October last year.

On top of that, market players are focusing on Malaysia's palm oil supply, as lower crude palm oil production arising from seasonally weaker yields could push prices up further.

Analysts said that the effect of biological stress could kick in soon after 12 months of a strong production up-cycle and that could lower palm oil production.

Brent crude fell for a second session on Wednesday, weighed by the possibility of a release of strategic oil reserves by the United States and European nations.

In other vegetable oil markets, the most active U.S. soyoil contract for May gained 0.1 percent in Asian trade after China snapped up U.S. soy cargoes following tight supplies in drought-hit south America.

The most active September 2012 soyoil contract on China's Dalian Commodity exchange was trading 0.2 percent lower. 

  Palm, soy and crude oil prices at 1015 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      APR2    3495   -17.00    3495    3515     154
  MY PALM OIL      MAY2    3482    -3.00    3467    3499    3243
  MY PALM OIL      JUN2    3473    -8.00    3463    3494   11503
  CHINA PALM OLEIN SEP2    8716   -16.00    8676    8774  233098
  CHINA SOYOIL     SEP2    9702   -22.00    9670    9764  548878
  CBOT SOY OIL     MAY2   55.17    +0.07   54.96   55.35    6704
  NYMEX CRUDE      MAY2  106.29    -1.04  106.22  106.94   16520

  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=3.062 ringgit)