18/04/2012 (Reuters) - Malaysian palm oil futures inched up on Tuesday on tightening global oilseed supply, although gains were limited as weaker exports and soaring Spanish borrowing costs weighed on sentiment.

Malaysian palm oil stocks dropped below the 2-million-tonne mark for the first time this year, reinforcing views of a tight global supply amid a lower soy crop in drought-hit South America.

But concerns of a slowing commodity demand also surfaced with Spain's surging borrowing costs stoking investor nervousness over euro zone debt woes and weaker global economic growth.

"Negative macroeconomic factors coupled with weaker export numbers may force traders to take profits. But fundamentally supply for crude palm oil and other vegetable oil is still very tight, so that should be supportive throughout the second quarter," said Alan Lim, research analyst with Kenanga Investment Bank in Malaysia.

At closing, benchmark July palm oil futures on the Bursa Malaysia Derivatives Exchange gained a 0.5 percent at 3,503 ringgit ($1,143) per tonne. 

Traded volumes stood at 32,201 lots of 25 tonnes each, higher than the usual 25,000 lots.

According to technical charts, a bearish target of 3,401 ringgit per tonne will only be confirmed if palm oil drops below 3,454 ringgit, Reuters market analyst Wang Tao said.

Malaysia's palm oil stocks for March fell to a seven-month low at 1.96 million tonnes, beating market estimates, forcing traders to ramp up crude palm oil purchases in fear of a potential shortfall. [ I D:nK7E7ND021] 

Malaysian palm oil exports fell by close to 15 percent for the first half of April from a month ago, according to cargo surveyor data. Exports for refined products suffered declines as orders shifted to top producer Indonesia, which enjoyed a favourable tax structure.   

Brent crude oil slipped to $118 on Tuesday, continuing a steep decline as rising Spanish debt costs raised fears of a new euro zone crisis that could derail economic growth.  

In other vegetable oil markets, the most active U.S. soyoil contract for May gained 0.7 percent, tracking healthy Chinese demand for soybeans, while the most active Dalian soyoil September contract also edged up 0.2 percent.  

  Palm, soy and crude oil prices at 1003 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      MAY2    3515   +17.00    3490    3520    1117
  MY PALM OIL      JUN2    3513   +23.00    3480    3513    8856
  MY PALM OIL      JUL2    3503   +16.00    3468    3503   17163
  CHINA PALM OLEIN SEP2    8862    +6.00    8842    8876  131816
  CHINA SOYOIL     SEP2    9886   +18.00    9852    9898  363416
  CBOT SOY OIL     MAY2   56.05    +0.39   55.61   56.05    3524
  NYMEX CRUDE      MAY2  103.62    +0.71  102.66  103.77   17121

  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=3.067 ringgit)