03/05/2012 (Reuters) - Malaysian palm oil futures edged lower on Wednesday as expectations of higher production offset strong exports and an uptick in global economic activity.

Strong factory activity data from the United States signalled the world's biggest economy was on a recovery track, although palm investors are looking at other cues in a market that has traded in a tight range for two weeks.

"Exports were strong but that is not the only factor. When exports were down 15 percent in the middle of April, the market also didn't respond very strongly," said James Ratnam, an analyst with TA Securities in Malaysia.

"All these things have an impact on futures prices, but people are also looking at the bigger picture." 

Benchmark July palm oil futures on the Bursa Malaysia Derivatives Exchange inched down 0.6 percent to close at 3,452 ringgit ($1,140) per tonne. 

Traded volumes stood at 27,369 lots of 25 tonnes each, higher than the usual 25,000 lots. 

The focus for palm oil has now shifted to production, which is expected to be pick up in April compared to a month ago, traders said. 

"We have exports which were up by 10 percent. So since the futures prices are not going up, there is an expectation that production will also be up by a double-digit percentage," said a Singapore-based trader with a commodity house.

Traders earlier feared that export demand for Malaysian oil will be down due to Indonesia's lower export tax for refined palm oil. 

Yet April exports jumped by almost 10 percent from a month ago, thanks to strong demand from major food buyers China and India.

Malaysia's policy response to Indonesia's favourable tax structure may come after the government lists its plantation assets in a $3 billion IPO, said top industry analyst Dorab Mistry.

Palm oil will fall to 3,397 ringgit per tonne based on technical analysis, said Reuters market analyst Wang Tao.

Oil eased on Wednesday, as weak economic data in Europe hit the demand outlook, countering more positive figures from China and the United States.  

In other vegetable oil markets, the most active U.S. soyoil contract for May gained 0.5 percent in Asian trade while  the most active Dalian soyoil September contract inched down 0.8 percent after resuming trading from a holiday break.     

  Palm, soy and crude oil prices at 1003 GMT
                                                                                             
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      MAY2    3456   -16.00    3448    3462     241
  MY PALM OIL      JUN2    3463   -11.00    3448    3474    2344
  MY PALM OIL      JUL2    3452   -19.00    3441    3470   15965
  CHINA PALM OLEIN SEP2    8730   -46.00    8712    8778  127394
  CHINA SOYOIL     SEP2    9864   -82.00    9852    9952  433236
  CBOT SOY OIL     JUL2   55.21    +0.30   54.95   55.25   13540
  NYMEX CRUDE      JUN2  105.76    -0.40  105.63  106.05   13771

  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 = 3.027 ringgit)