7/3/07 (Reed Business) Netherlands - Palm oil futures in Malaysia fell on speculation that record soybean crops in South America may boost soybean oil output and reduce demand for competing palm oil.

Farmers in Brazil will boost output of the soybeans 6.2% to 56.7 million metric tons this year and top a February estimate of 56.3 million tons, the government said. Harvests in Argentina are also expected to rise. Brazil is the world's second-largest producer of soybeans and Argentina is the biggest exporter of animal feed and vegetable oil produced from soybeans.

Palm oil for May delivery fell 6 ringgit, or 0.3%, to 1,937 ringgit ($552) a ton on Tuesday at noon on the Malaysia Derivatives Exchange.

Some investors expected the US Department of Agriculture to raise its estimates for South American soybean production and put further pressure on soybean prices, an analyst on the futures market said.