16/11/2011 (Reuters) - Malaysian palm oil futures ended slightly lower on Tuesday after earlier rising to their highest level in nearly five months as lingering concerns about the euro zone's debt offset robust demand and expectations of falling output.

Benchmark January palm oil futures on the Bursa Malaysia Derivatives Exchange ended 0.6 percent lower at 3,176 Malaysian ringgit ($1,012) per tonne. Prices earlier touched a peak at 3,209 ringgit, a level not seen since June 22. 

Traded volumes for the January palm contract were at more than one-month highs at 17,076 lots of 25 tonnes each, compared with 7,476 lots on Monday. 

"Europe is on everyone's mind -- what will eventually happen is anybody's guess," said a Kuala Lumpur-based palm trader. "But we have China's insatiable demand and supply constraints ... November and December are low production months." 

European shares and the euro fell as investors renewed selling of Italian and Spanish bonds, while a sharp rise in French yields pointed to a growing risk that the two-year debt crisis may spread to one of the region's big two economies.

In related markets, U.S. soyoil for December delivery rose in Asian trade, while China's most active May 2012 soybean oil contract also climbed slightly.

Brent crude oil futures rose more than $1 per barrel, as hopes for progress in resolving the euro zone's debt crisis helped encourage some consolidation after heavy falls in the previous session.

Malaysian palm oil is expected to fall to 3,100 ringgit, as indicated by its wave pattern and the RSI indicator, Reuters analyst Wang Tao said.

Benchmark palm prices have fallen about 15 percent this year, partly due to the uncertain macro and sovereign debt picture and demand outlook. 

Palm oil sentiment is improving, despite the economic outlook, due to lower production expectations from the fourth quarter, as dominant Southeast Asian producers enter the rainy season and the La Nina weather pattern is seen returning.

"Prices moved up so much recently," said a Jakarta-based trader. "There is profit-taking and consolidation before it again goes higher." 

At the same time, palm oil demand is seen rising in top buyers India and China. Exports of Malaysian palm oil products for Nov 1-15 rose, cargo surveyors Intertek Testing Services and Societe Generale de Surveillance said.
  
"The ITS export data is a bit higher than what most people were talking about yesterday," said another Kuala Lumpur trader. 
     
  Palm, soy and crude oil prices at 1019 GMT
                                                                                                           
  Contract                 Month    Last   Change    Low    High  Volume
  M'ASIA PALM OIL  NOV1    3180   +10.00    3180    3180         18
  M'ASIA PALM OIL  DEC1    3184    -24.00    3175    3218       2367
  M'ASIA PALM OIL  JAN2     3176    -19.00    3163    3209     17076
  M'ASIA PALM OIL  FEB2     3178    -16.00    3157    3206     11328
  DALIAN SOY OIL   MAY2    9218   +16.00    9148     9238   274334
  CBOT SOY OIL      DEC1    51.75    +0.53    51.12    51.91     7538
  NYMEX CRUDE      DEC1   98.19    +0.06    97.63    98.35    17164
                                                                                                           
  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil in Chinese yuan per tonne
  Crude in U.S. dollars per barrel
   
 ($1 = 3.136 ringgit)