31/03/2012 (Reuters) - Malaysian palm oil futures extended its losing streak into a third day on Friday, as traders grew cautious ahead of a key U.S. report on soybean plantings and stocks, although healthy demand for the edible oil curbed losses.

Palm oil futures started the week strongly, going close to 3,500 ringgit on expectations of a shift in demand to the tropical oil as soybean supplies were tight in drought-hit South America.

But some gains were given up later on in the week as market players took profit ahead of the U.S. Department of Agriculture's quarterly inventory report and planting forecast due later in the day.  

"Prices were down and it could be due to the market pricing in the USDA reports on plantings and maybe the market is not very optimistic about it," said Selena Leong, an analyst at DMG & Partners Research in Singapore.

Benchmark June palm oil futures on the Bursa Malaysia Derivatives Exchange lost 0.7 percent to close at 3,433 ringgit ($1,121) per tonne. This week the market went as high as 3,497 ringgit, a level unseen since March 10 2011.

Traded volumes stood at 21,018 lots of 25 tonnes each, compared to the usual 25,000 lots.

Palm oil futures started the year strongly, ending off the first quarter with a 8.1 percent gain.

Palm oil investors are watching the USDA planting reports to gauge soybean output for the coming months. Tighter soybean supply could boost demand for palm oil, which competes with crushed soybean oil in global market.

Traders are also expecting March exports to be higher than February as there appears to be steady improvement in buying interest for the tropical oil.

Exports for the first 25 days of the month rose 6.6 percent, according to cargo surveyor Societe Generale de Surveillance.

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.

Brent crude rose towards $123 on Friday as investors bet on a tighter gasoline market in the world's largest oil consumer during the peak summer driving season and on persistent worries of a supply disruption in the Middle East.

In other vegetable oil markets, the most active U.S. soyoil contract for May gained 0.7 percent in Asian trade while the most active September 2012 soyoil contract on China's Dalian Commodity exchange was trading down 1.0 percent

  Palm, soy and crude oil prices at 1015 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      APR2    3480    -3.00    3475    3481      22
  MY PALM OIL      MAY2    3449   -16.00    3439    3460    2593
  MY PALM OIL      JUN2    3433   -23.00    3426    3445   10581
  CHINA PALM OLEIN SEP2    8574  -104.00    8570    8636  135300
  CHINA SOYOIL     SEP2    9560  -100.00    9558    9612  374854
  CBOT SOY OIL     MAY2   53.97    +0.38   53.69   54.10    7516
  NYMEX CRUDE      MAY2  103.37    +0.59  102.95  103.60   20062

  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)