30/03/2012 (Business Recorder) - Malaysian palm oil futures slipped for a second day on Thursday, as traders booked more profit from a rally this week, although losses were curbed by soybean supply fears in South America and firm export outlook for palm oil.

Palm oil could not breach the psychological 3,500 ringgit level this week, especially when market players were cautious ahead of the US Department of Agriculture's quarterly inventory report and planting forecast due on Friday.

"We see that palm oil prices have come to a one-year high, so it's not surprising that some profit-taking activities start to kick in, especially now as we are at the end of the month, some book squaring is going to happen," said Ker Chung Yang, an analyst at Phillip Futures in Singapore.

Benchmark June palm oil futures on the Bursa Malaysia Derivatives Exchange closed down 0.5 percent at 3,456 ringgit ($1,127) per tonne.

This week the market went as high as 3,497 ringgit, a level unseen since March 10 2011.

Traded volumes were thin at 20,280 lots of 25 tonnes each, compared to the usual 25,000 lots.

Palm oil investors are watching closely on the acreage battle between corn and soybean because a smaller planted area for soybean could boost demand for palm oil, which competes with crushed soybean oil in the vegetable oil market.

Malaysian export data for the first 25 days of March pointed to an improvement in buying interest for the tropical oil compared to a month ago, and traders are expecting exports for the full month to end higher.

Market players are also focusing on Malaysia's palm oil supply, which could be lower in March on the back of seasonality and the effect of biological stress.

In other vegetable oil markets, the most active US soyoil contract for May lost 0.1 percent in Asian trade while the most active September 2012 soyoil contract on China's Dalian Commodity exchange was trading down 0.8 percent.