20/03/2012 (Reuters) - Malaysian palm oil futures ended lower on Monday as investors booked profits on concerns the market was overbought, although losses were capped by upbeat demand prospects and soybean supply fears in drought-hit South America.

Palm oil prices hit a nine-month high of 3,418 ringgit last Friday, setting the stage for a price correction that pared gains to 6.2 percent so far this year.

"It's not surprising that the market came down today although the fundmentals didn't change. This is more of a correction and immediate support now is around 3,350 ringgit," said a trader with a foreign commodities brokerage.

But sentiment is still fairly bullish as market players expect Malaysia's strong export trend to continue as big buyers like China may increase edible oil shipments.

"There's news that the Chinese government has purchased less soybean oil domestically. That's a sign that their local supply is low, so they may import more," said Alan Lim, an analyst with Kenanga Investment Bank in Malaysia.

Benchmark June palm oil futures on the Bursa Malaysia Derivatives Exchange lost 0.7 percent to close at 3,373 ringgit ($1,105) per tonne.

Traded volumes on Monday stood at 24,893 lots of 25 tonnes each, slightly lower than the usual 25,000 lots. Palm oil will retrace to 3,360 ringgit per tonne as it still hovers around a resistance of 3,398 ringgit, said Reuters market analyst Wang Tao.  

Investors are keeping an eye out for cargo surveyors Intertek Testing Services and Societe Generale de Surveillance, which reported monthly increases of 37 percent and 42 percent respectively in Malaysian exports for March 1-15.

That represented an improvement compared to the first 10 days and the surveyor data also pointed to strengthening demand from Europe, as exports to the region more than doubled from a month ago.

The cargo surveyors will release export data for March 1-20 on Tuesday and market players expect to see an increase of around 12 percent compared to a month ago.

Market players are also focusing on the official planting forecasts from the U.S. Department of Agriculture due at the end of the month to help gauge soybean output for the year. Lower soybean output means less for crushing into soyoil, allowing palm oil to meet the shortfall.

Brent crude was steady below $126 a barrel, as prices were supported by continued concerns over a potential supply disruption from Iran, with the risk of major supply squeeze still being factored in.

In other vegetable oil markets, the most active U.S. soyoil contract for May delivery lost 0.6 percent while the most active September 2012 soyoil contract on China's Dalian Commodity exchange edged up slightly on strengthening demand prospects.

  Palm, soy and crude oil prices at 1001 GMT
                                                                                      
  Contract                       Month    Last   Change     Low    High  Volume
  MY PALM OIL             APR2    3372   -22.00    3372    3412     633
  MY PALM OIL              MAY2    3368   -32.00    3368    3412    3386
  MY PALM OIL             JUN2    3373   -25.00    3368    3412   13646
  CHINA PALM OLEIN SEP2    8658    +4.00    8636    8690  138356
  CHINA SOYOIL          SEP2    9678    +4.00    9646    9720  455168
  CBOT SOY OIL          MAY2   55.16    -0.34   55.12   55.60    5609
  NYMEX CRUDE        APR2  106.76    -0.30  106.58  107.48    8783
                                                                                      
  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=3.05 ringgit)