01/08/2012 (Reuters) - Malaysian crude palm oil edged lower on Tuesday, posting its third successive monthly loss, as weak July exports offset a downgrade of soy crop conditions by the U.S. Department of Agriculture that fed fears of tighter global oilseed supplies.

The USDA rated 29 percent of the soybean crop as good-to-excellent on Monday, down 2 percentage points from the previous week, reflecting damage from persistent drought in the U.S. Midwest.

But palm oil futures retreated from a one-week high hit the previous day as traders priced in a monthly decline in Malaysian palm oil exports that could ease stocks.

"Exports are worse than expected," said a dealer with a foreign commodities brokerage in Kuala Lumpur. "Hopefully crude palm oil exports will pick up after the release of the tax-free quota or else stocks might climb back up to the 2-million-tonne mark."

Benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange lost 0.8 percent to close at 2,980 ringgit ($953) per tonne. Prices touched 3,007 ringgit on Monday, the highest level since July 23.

Crude palm oil futures lost 1.3 percent in July, marking their third monthly loss in a row.

Traded volumes stood at 34,609 lots of 25 tonnes each, higher than the usual 25,000 lots.

On the technicals front, palm oil will retrace to 2,930 ringgit as it has completed a rebound from 2,880 ringgit, Reuters market analyst Wang Tao said.

Cargo surveyor Intertek Testing Services reported July export numbers at 1.23 million tonnes, down 15 percent from 1.45 million in June. Another cargo surveyor, Societe Generale de Surveillance, reported a 19 percent decline for the same period.

Reuters reported on Monday that Malaysia would increase shipping quotas for tax free crude palm oil by up to 2 million tonnes this year to help planters cope with higher output in the next few months as the world's No.2 supplier struggles to maintain its export momentum.

In response, industry body the Palm Oil Refiners Association of Malaysia (PORAM) said late on Monday that Malaysian palm oil refining capacity use will fall to less than 60 percent if the government continues with the plans, and the move will jeopardise the refining industry's competitiveness.

Brent crude slipped below $106 per barrel on Tuesday as caution among investors grew, reducing prospects for palm oil  to be diverted to making biodiesel.

Other vegetable oil markets also traded lower, erasing gains from the previous day.

By 1006 GMT, the most active U.S. soyoil contract for December delivery and the most active January 2013 soyoil contract on the Dalian Commodity Exchange had lost 0.2 percent.   

  Palm, soy and crude oil prices at 1006 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      AUG2    2955   -25.00    2931    2955     310
  MY PALM OIL      SEP2    2965   -29.00    2938    2982    4317
  MY PALM OIL      OCT2    2980   -25.00    2948    2997   17976
  CHINA PALM OLEIN JAN3    7860    -4.00    7802    7892  250418
  CHINA SOYOIL     JAN3    9522   -16.00    9470    9526  397398
  CBOT SOY OIL     DEC2   53.29    -0.09   52.85   53.45    5801

  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
  ($1=3.129 Malaysian ringgit)