* Malaysia's July palm oil exports fell 2.8 pct -SGS
* Malaysian output to quicken, demand seen weaker in August -trader
* Palm oil targets 2,200 ringgit -technicals
* Higher palm output to cap prices, depending on El Nino -growers, analysts

05/08/2014 (Reuters) - Malaysian palm oil futures fell on Monday as fears of rising output amid slackening overseas demand piled pressure on to the tropical oil, while weaker comparative soyoil prices weighed.

Market players said production in Malaysia, the world's second-largest grower, likely picked up in July and could continue to rise August onwards. Export demand, however, dwindled at the end of July as reported by cargo surveyor data.

"Our production is very, very good. It is picking up steam," said a trader with a local commodities brokerage in Malaysia. "But demand looks to be not as vibrant as what we saw in the month of July. We're a little sceptical whether we can maintain the momentum in August," the trader added.

The benchmark October contract on the Bursa Malaysia Derivatives Exchange had edged down 0.7 percent to 2,268 ringgit ($709) per tonne by Monday's close.

Total traded volume stood at only 19,376 lots of 25 tonnes, compared with the average 35,000 lots.

Palm oil output in the world's top growers Indonesia and Malaysia is expected to gain momentum in the final months of this year and keep a lid on prices, although a potential El Nino and tree stress could curb the rise, planters and analysts said on Monday.

Technicals were bearish. Malaysian palm oil is expected to break a support at 2,250 ringgit per tonne and fall more towards 2,220 ringgit, driven by wave 5, according to Reuters market analyst Wang Tao.

Prospects of bigger supplies of soybeans, thanks to near-record production in the United States, have dragged soyoil prices and narrowed the spread to competing palm.

Weaker soyoil prices paint a bleak picture for palm, a common food and fuel substitute, as it has to remain competitive to rival soyoil or risk losing demand to price-sensitive buyers such as India and China.

Kenanga Investment Bank analyst Alan Lim cut forecasts for average crude palm oil prices this year to 2,500 ringgit per tonne from 2,800 ringgit, citing "lower soybean oil prices estimates".

Stockpiles in July likely rose to 1.65 million tonnes due to weaker-than-expected exports in the month, Lim added.

"We believe that palm oil lost its competitiveness against soybean oil in July as soybean oil prices have declined significantly by 7 percent to 36.11 U.S. cents per pound," he said in a research note on Monday.

Cargo surveyor Societe Generale de Surveillance on Monday reported that exports of Malaysian palm oil products for July fell 2.8 percent to 1.35 million tonnes as demand to China, Pakistan and the U.S. fell.

Another cargo surveyor, Intertek Testing Services, earlier showed that exports for the same period also fell 2.8 percent.

The U.S. soyoil contract edged down 0.1 percent in late Asian trade, while the most active soybean oil contract on the Dalian Commodities Exchange fell 0.5 percent.

A small rebound in the ringgit also dampened buying interest from overseas investors, although market players said the currency was still supportive for now.

The Malaysian ringgit gained 0.34 percent to 3.2010 against the greenback on Monday, after data on U.S. jobs growth in July. Missed market expectations and pressured the dollar.

In other markets, Brent crude oil steadied around $105 a barrel on Monday as worries about global oversupply outweighed concerns over escalating violence in North Africa and the Middle East.

Palm, soy and crude oil prices at 1009 GMT.

Contract Month Last Change Low High Volume

MY PALM OIL AUG4 2329 -28.00 2328 2339 136
MY PALM OIL SEP4 2300 -15.00 2285 2302 1521
MY PALM OIL OCT4 2268 -16.00 2253 2270 13107
CHINA PALM OLEIN JAN5 5634 -12.00 5610 5666 353896
CHINA SOYOIL JAN5 6400 -34.00 6376 6412 273038
CBOT SOY OIL DEC4 35.69 -0.02 35.63 36.10 6118
NYMEX CRUDE SEP4 97.92 +0.04 97.62 98.21 16230

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 = 3.201 Malaysian ringgit)
($1 = 6.1785 Chinese yuan)