08/06/2011 (Business Recorder) - Malaysian palm oil slipped to anear three-week low on Tuesday as technical selling and weak oilmarkets weighed on prices, while investors positioned themselvesahead of a flurry of data due at the end of the week.

The benchmark August crude palm oil contract on theBursa Malaysia Derivatives Exchange traded 1.3 percent lower, at3,343 ringgit ($1,112) a tonne. Prices earlier fell to 3,343ringgit -- its lowest level since May 19.

Overall traded volume stood at 6,128 lots of 25 tonnes each,versus a total of 9,549 lots on Monday.

"Market down today," said one trader. "Soybean and crude oildropped ... but it's also technical."

He added that a support level was at 3,320 ringgit, asinvestors awaited key stock and production data from Malaysia,the world's second biggest producer, later this week.

The most-active January 2012 soyoil contract onDalian dipped about 1 percent, as Chinese markets re-openedafter a public holiday on Monday.

On a packed data calendar this week, the Malaysian Palm OilBoard is due to release stocks, export and production numbers onFriday.

Malaysian palm oil stocks likely soared to a 16-month highin May as strong production growth overtook a modest increase inexports, a Reuters survey showed on Monday.

Also on Friday, Cargo surveyors Intertek Testing Servicesand Societe Generale de Surveillance are scheduled to issue June1-10 palm oil export numbers.

Before Friday, however, the US Department of Agriculture will release its June supply-demand report on Thursday.

Palm oil traders are also watching for any possible interestrate hikes in China, which could hit imports.

ICDX's August CPO futures contract ended at 9,670rupiah per kg, compared to 9,855 rupiah per kg when it opened.Market volume was 665 lots of 10 tonnes each.

"It's down because we do expect production to increasesubstantially," said a palm oil analyst, when asked about hissecond half outlook. "On top of that, there is a risk that theIndonesian government is going to lower the export tax whichwould increase the supply into the export market."

He added that benchmark prices could fall to a low ofbetween 2,500-2,700 ringgit in the second half of 2011.

In related markets, Brent crude fell below $114 a barrel on expectations OPEC may raise its production target this week andlingering concerns that a weak economic outlook will dent demand.