13/01/2012 (Reuters) - Malaysian crude palm oil futures fell on Thursday, tracking an earlier decline in soy futures as rains in Argentina provided temporary relief to the drought-stressed crops while investors remained cautious ahead of a key U.S. report.

The U.S. Department of Agriculture will issue January world  crop data which traders expect to show downgrades of South American crop forecasts.

Investors were also wary ahead of key events in Europe that include debt auctions and a European Central Bank meeting, looking for signs that could indicate the severity of the debt crisis.

"The market's tracking soyoil which was down quite bad. On the local front there's not much to lead the market. It's a range trading within 3,200-3,250 ringgit," said a trader with a foreign commodities brokerage in Kuala Lumpur.

Benchmark March palm oil futures on the Bursa Malaysia Derivatives Exchange eased 1 percent to close at 3,202 ringgit ($1,020) per tonne.

Traded volumes stood at 17,886 lots of 25 tonnes each, thinner than the usual 25,000 lots.

"The market's quiet in the first half of the month and we are approaching a long festival season, so a lot of people will want to even out their positions," added the trader, referring to the Lunar New Year holidays which begin later this month.

Reuters market analyst Wang Tao maintained a bearish target for palm oil futures at 3,176 ringgit per tonne based on charts and technical analysis.

The Malaysian weather office issued warnings that intermittent rain may cause floods over low-lying areas in Johor and Pahang, key oil palm producing states that account for 30 percent of national output.

Traders are keeping an close eye on weather as floods could hurt palm oil output, adding pressure to tightening stocks but there have not been any reports of a serious disruption in production so far.

The Malaysian Palm Oil Board said on Tuesday that Malaysia's opening palm oil stocks for 2012 stayed above the psychological level of 2 million tonnes.

Stock levels fell 1.5 percent from November, better than expectations of a 5.7 percent decline based on a Reuters survey.

In signs of a slowing demand, cargo surveyors Intertek Testing Services and Societe Generale de Surveillance reported a 14 and 19 percent drop in Malaysia's palm oil exports for the Jan. 1-10 period but the declines were in line with industry's expectations. 

Brent crude rose more than $1 per barrel on Thursday on worries a showdown between Iran and the West in the Middle East Gulf and a strike in Nigeria could disrupt oil supplies.

In other vegetable oil markets, the most active U.S. soyoil for March delivery inched up 0.5 percent after an earlier loss while the most active September 2012 soyoil contract on China's Dalian commodity exchange eased 0.4 percent. 

  Palm, soy and crude oil prices at 1003 GMT

                                                                    
  Contract                      Month    Last   Change     Low    High  Volume
  MY PALM OIL              JAN2    3225    +1.00    3220    3225       9
  MY PALM OIL              FEB2    3220   -17.00    3209    3227    1353
  MY PALM OIL              MAR2    3202   -31.00    3198    3222    9346
  CHINA PALM OLEIN SEP2    8140   -26.00    8120    8158   50932
  CHINA SOYOIL           SEP2    9082   -32.00    9058    9092  164286
  CBOT SOY OIL           MAR2   52.11    +0.21   51.75   52.28    4993
  NYMEX CRUDE         FEB2  101.85    +0.98  100.89  101.87   14773
                                                                   
  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
  Crude in U.S. dollars per barrel
  ($1 = 3.14 ringgit)