08/08/2012 (Reuters) - Malaysian crude palm oil touched its lowest in more than a week on Tuesday, as traders priced in wetter weather in the U.S. Midwest that eased concerns about further damage to new-crop oilseed supplies.

Investors also avoided taking risky positions ahead of key reports later in the week. Industry regulator Malaysian Palm Oil Board (MPOB) will release official stocks and output data on Friday, and traders expect a recovery in stocks after a 14-month low in June.

A monthly supply and demand report due later this week from the U.S. Department of Agriculture (USDA) could also provide some clues on soybean production trends and the extent of drought damage.   

"The market is exercising caution here ahead of MPOB and USDA data," said a dealer with a foreign commodities brokerage in Malaysia.

"The crop rating was rather neutral despite some rains reported over the weekend," he added, referring to the unchanged weekly soybean crop condition rated by the USDA.

The benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange closed 0.4 percent lower at 2,907 ringgit ($938) per tonne. Prices earlier touched a low at 2,897 ringgit, a level last seen on July 27.

Total traded volume came in at 23,574 lots of 25 tonnes each, fewer than the usual 25,000 lots.

The supply-demand report from the USDA later this week could offer more clues for traders on the extent of soy crop damage from the worst drought in 56 years.

A lower quality of soybean crop, leading to a smaller supply of soybean oil, could shift more vegetable oil demand to the cheaper palm oil.

Market participants are also looking out for the Malaysian palm oil export figures for the Aug 1-10 period.

Exports in July suffered a double-digit monthly decline and could lead to higher stocks especially on the back of higher production for the month. 

Oil futures rose above $110 a barrel on Tuesday, on hopes that Europe would take further action to tackle its intractable debt crisis, while supply worries stemming from North Sea maintenance and Middle East tensions added further support.

In other vegetable oil markets, by 1010 GMT, the most active U.S. soyoil contract for December delivery had gained 0.8 percent and the most active January 2013 soyoil contract  on the Dalian Commodity Exchange had edged up 1 percent.

  Palm and soy oil prices at 1010 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      AUG2    2840   -48.00    2840    2870     131
  MY PALM OIL      SEP2    2884   -14.00    2863    2914    1190
  MY PALM OIL      OCT2    2907   -11.00    2897    2937   14002
  CHINA PALM OLEIN JAN3    7826   +44.00    7782    7844  193630
  CHINA SOYOIL     JAN3    9612   +96.00    9522    9624  547482
  CBOT SOY OIL     DEC2   52.70    +0.41   52.22   52.99    5749

  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
  ($1=3.1 Malaysian ringgit)