11/02/2012 (Business Recorder) - Malaysian crude palm oil fell on Friday on the back of a bearish US crop report and prospects of slowing demand, although losses were capped by a long-awaited bailout deal for Greece which has yet to be approved.

The US Department of Agriculture on Thursday forecast larger-than-expected soybean supplies in its monthly report even as a severe drought curbed yields in Brazil and Argentina, putting pressure on palm oil prices, which track soybean oil closely.

"The market's a little bearish because it expects a steeper production drop in the South American crop," said a dealer with a foreign commodities brokerage in Kuala Lumpur.

Benchmark April palm oil futures on the Bursa Malaysia Derivatives Exchange lost 0.5 percent to close at 3,131 ringgit ($1,034) per tonne.

The futures market has lost 1.4 percent so far this year.

Traded volumes were thin at 22,375 lots of 25 tonnes each, compared to the usual 25,000 lots.

Reuters market analyst Wang Tao said palm oil futures will retrace further to 3,084 ringgit per tonne as they have completed a rebound from the February 2 low of 3,036 ringgit.

Malaysia's January palm oil stocks fell 2.5 percent to 2,007,967 tonnes from a revised 2,058,400 tonnes in December, industry regulator Malaysian Palm Oil Board said on Friday, in line with market expectations.

A Reuters survey of six plantation houses earlier showed Malaysia's palm oil stocks in January probably fell to a five-month low to nearly 2 million tonnes as a drop in exports outran a fall in production.

On the demand side, cargo surveyor Intertek Testing Services said Malaysian palm oil exports from February 1 to 10 fell 7.7 percent to 342,982 tonnes from a month ago.

Another cargo surveyor Societe Generale de Surveillance said palm oil exports for the same period dropped 4.3 percent to 337,618 tonnes.

The US soyoil contract for March delivery slipped 0.3 percent in Asian trade on the back of the bearish USDA report while the most active September 2012 soyoil contract on China's Dalian Commodity exchange also fell 0.7 percent.