02/06/2012 ((Reuters) - Malaysian palm oil futures dropped to their lowest level in almost a week on Friday as investors worried about demand from China after weak manufacturing data, the latest sign that the euro zone debt crisis will further slow global growth.

The decline in China's official purchasing manager's index showed output in the world's second largest economy was cooling, denting the optimism of traders who are betting on firm demand for palm oil ahead of the Muslim fasting month of Ramadan which begin in mid-July.

"Everyone knows there will be a drawdown in Malaysian palm oil stocks but nobody cares," said a trader with a palm oil trading firm in Kuala Lumpur. "It is all about the global economy and China is not helping."

By the midday break, the benchmark August palm oil futures on the Bursa Malaysia Derivatives Exchange dropped 1.8 percent to 3,044 ringgit ($960) per tonne after going as low as 3,040 ringgit, its weakest since May 25. Prices have lost 2.7 percent this week. 

Traded volumes stood at 10,072 lots of 25 tonnes each, slightly lower than the usual 12,500 lots that change hands in the morning session.

Reuters analyst Wang Tao kept his bearish target for palm oil prices at 2,993 ringgit per tonne, as its downtrend from an April 10 high of 3,628 ringgit is intact.

Asian for palm oil remains firm with cargo surveyors reporting a slight increase in Malaysian exports in May.

The bulk of the orders mostly come from Pakistan and the Middle East where Muslims are getting ready to observe the fasting month starting in mid July, which is followed by another month of feasting.

Stocks are likely to drop for a third month in May, traders say, as exports probably outpaced sluggish production in Malaysia, the world's second largest supplier.

Other global commodity markets also weighed on palm oil. Brent crude fell towards $101 a barrel, kicking off June in the red. U.S. soyoil for July  delivery barely moved and the most active Jan 2013 soyoil contract on the Dalian commodity exchange lost nearly 1 percent. 

  Palm, soy and crude oil prices at 0444 GMT

  Contract        Month    Last   Change     Low    High  Volume

  MY PALM OIL      JUL2    3043   -57.00    3042    3069     579
  MY PALM OIL      AUG2    3044   -57.00    3040    3076    6810
  CHINA PALM OLEIN SEP2    7840   -90.00    7832    7898   63308
  CHINA SOYOIL     JAN3    9174   -86.00    9170    9228  222056
  CBOT SOY OIL     JUL2   49.29    +0.09   49.21   49.48    2234
  NYMEX CRUDE      JUL2   86.40    -0.13   85.90   86.59    7230

  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 = 3.1717 Malaysian ringgit)