26/09/2012 (Reuters) - Malaysian palm oil futures recovered on Tuesday after hitting a two-year low the day before, lifted by bargain hunting and a strong outlook for demand, going by positive export data.

Data from cargo surveyor Intertek Testing Services (ITS) showed exports of palm oil rose 8 percent in the first 25 days of September, boosting hopes for strong demand after a recent global sell-off in commodity markets.

"ITS showed an 8 percent increase, it looks to be a little bit more subdued, given the strong pace at the start of the month, but it's still showing a decent recovery," said StanChart analyst Abah Ofon.

Another cargo surveyor, Societe Generale de Surveillance, reported a steeper 11 percent increase in exports for the same period.

At the close, the benchmark December contract on the Bursa Malaysia Derivatives Exchange gained 0.9 percent to close at 2,669 ringgit ($870) per tonne.

Palm oil prices on Monday tumbled to 2,577 ringgit -- a level unseen since September 2010 -- as rising stocks and bearish views by industry analysts at a vegetable oil conference in India dragged on the market.

Total traded volumes on Tuesday stood at 41,793 lots of 25 tonnes each, much higher than the usual 25,000 lots.

Analysts expect palm oil prices in the next few weeks to be lifted by falling yields and a pickup in demand as the market recovers from a seasonally low month in September.

"If productivity falls, which I believe it will, then that, as well, is going to be supportive of the complex," said Ofon, who pegged prices at 3,250 ringgit in the fourth quarter of 2012 and 3,500 ringgit for the first quarter of next year.

"We expect that, as, heading into Q1, the market is really going to spike. There's a lot of things that are happening to suggest that any downside in palm prices is going to be short lived," he added.    

In a bullish sign for palm oil, oil rose above $110 a barrel on Tuesday as escalating tension over Iran offset plentiful supplies and concern over the health of the global economy.

In other vegetable oil markets, U.S. soyoil for December delivery fell 0.2 percent as record pace of U.S. harvest weighed on sentiment in late Asian trading hours.

The most active January 2013 soyoil contract on the Dalian Commodity Exchange closed 0.2 percent higher.

  Palm, soy and crude oil prices at 1004 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      OCT2    2540   +28.00    2460    2540     404
  MY PALM OIL      NOV2    2605   +27.00    2543    2609    4522
  MY PALM OIL      DEC2    2669   +23.00    2607    2676   21399
  CHINA PALM OLEIN JAN3    7266  -122.00    7202    7380  687014
  CHINA SOYOIL     JAN3    9518   +20.00    9462    9590  558688
  CBOT SOY OIL     DEC2   54.05    -0.12   53.80   54.27    7971
  NYMEX CRUDE      NOV2   92.21    +0.28   91.80   92.77   22204

  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