* Palm falls from previous session's two-month high of 2,512 rgt

* Market drops tracking weaker rival oils, technical correction -trader

* Palm oil may fall to 2,432 rgt/T -technicals

(Updates latest prices)

12/08/2016 (Reuters) - Malaysian palm oil futures snapped a three-day rally on Thursday evening, falling from a near two-month high reached in the previous session and tracking weaker rival oils.

Benchmark palm oil futures for October on the Bursa Malaysia Derivatives Exchange fell 0.6 percent to 2,484 ringgit ($621) per tonne at the end of the trading day, dropping from a previous session's top of 2,512 ringgit, the strongest levels since June 14.

Traded volumes stood at 64,719 lots of 25 tonnes each in the evening, higher than last year's average of 44,600. "Overseas markets are softer today," said a trader from Kuala Lumpur, referring to competing vegetable oils such as soyoil.

"We are also undergoing a technical correction, as it is overdone on yesterday's sharp move up."

Palm oil rose for a third straight session on Wednesday afternoon after official data from government body the Malaysian Palm Oil Board (MPOB) showed that stockpiles for end-July unexpectedly declined.

Inventories had fallen by 0.2 percent from June to reach 1.77 million tonnes, against a Reuters forecast of a 3.1 percent rise to 1.83 million tonnes.

MPOB data also showed that exports surged 21 percent lifted by better demand from China, the world's second largest importer of palm oil, while July production rose 3.5 percent month-on-month to 1.59 million tonnes.

Weaker performing vegetable oils also weighed on palm. The Chicago Board of Trade soybean oil December contract was down 1 percent, while the January soybean oil contract on the Dalian Commodity Exchange fell 1.5 percent.

Palm oil may fall to 2,432 ringgit per tonne, as it failed again to break resistance at 2,489 ringgit, said Reuters market analyst for commodities and energy technicals Wang Tao.

Palm, soy and crude oil prices at 1042 GMT

Contract Month Last Change Low High Volume

MY PALM OIL AUG6 2611 -18.00 2611 2630 103

MY PALM OIL SEP6 2552 +15.00 2492 2553 4503

MY PALM OIL OCT6 2482 -16.00 2441 2493 30266

CHINA PALM OLEIN JAN7 5228 -72.00 5222 5362 957286

CHINA SOYOIL JAN7 6148 -92.00 6144 6274 550676

CBOT SOY OIL DEC6 31.67 +0.00 31.65 32.12 7558

INDIA PALM OIL AUG6 538.60 -4.50 530.40 545.7 2321

INDIA SOYOIL AUG6 633.4 -3.25 632 637 9740

NYMEX CRUDE SEP6 41.64 -0.07 41.10 41.72 82056

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 = 4.0020 ringgit)
($1 = 66.8675 Indian rupees)
($1 = 6.6378 Chinese yuan)