* Palm oil falls after strongest daily gains in nearly 5 months
* Market dips on profit taking, expectations of output rise -trader
* Palm seen supported as ringgit remains weak -trader

06/05/2016 (Reuters) - Malaysian palm oil futures reversed gains made in early trade on Thursday, declining after seeing its sharpest jump in almost five months on Wednesday, as traders forecast higher production and took profits from the previous session's gains.

The palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was 0.2 percent lower at noon, settling at 2,611 ringgit ($653) per tonne.

Palm on Wednesday surged 3 percent to 2,627 ringgit, its strongest gain in nearly five months. The contract had declined in the previous four sessions before on falling export demand and expectations of rising production ahead of a government data
release next Tuesday.

Traded volumes were 27,769 lots of 25 tonnes each at Thursday noon.

"Yesterday's market was overdone, production is coming up too, hence traders believe the market should go lower," said a trader in East Malaysia.

The market could rise in later trade today despite current profit-taking activity, said another trader, as the ringgit remains weak and competing oils gain.

The September soybean oil contract on the Dalian Commodity Exchange rose 0.3 percent, while the Chicago Board of Trade soyoil contract for July gained 0.8 percent.

A weaker ringgit, the currency palm oil is traded in, makes the vegetable oil cheaper for holders of foreign currency.

Output in Malaysia, the world's second largest palm producer, is seen rising in April in line with seasonal trends, adding to stockpiles and pressuring benchmark palm prices. <MYPOMP-CPOTT> <MYPOMS-TPO>

Leading industry analysts had earlier forecast for global palm supplies to decline between 1 million to 3 million tonnes this year, as a crop damaging El Nino impacts yields and lowers output across Southeast Asia.

The offer price for crude palm kernel oil stood at 4877.71 ringgit per tonne <PKO-MYSTH-M1> at noon, according to price assessments by Thomson Reuters.

Palm, soy and crude oil prices at 0510 GMT:

Contract Month Last Change Low High Volume
MY PALM OIL MAY6 0 +0.00 0 0 0
MY PALM OIL JUN6 2615 -3.00 2610 2632 1903
MY PALM OIL JUL6 2611 -5.00 2609 2632 13804
CHINA PALM OLEIN SEP6 5462 +62.00 5442 5510 671824
CHINA SOYOIL SEP6 6172 +24.00 6156 6214 391748
CBOT SOY OIL JUL6 32.72 +0.20 32.54 32.77 3911
INDIA PALM OIL MAY6 551.90 +0.20 549.60 553.8 555
INDIA SOYOIL MAY6 649.5 +3.20 646.2 649.7 3510
NYMEX CRUDE JUN6 44.57 +0.79 44.01 44.80 37920

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
India soy oil in Indian rupee per 10 kg
Crude in U.S. dollars per barrel

($1 = 3.9980 ringgit)
($1 = 66.5275 Indian rupees)
($1 = 6.5000 Chinese yuan)