03/08/2012 (Reuters) - Malaysian crude palm oil ended flat after touching its lowest in the week on Thursday as wet weather forecast in the U.S. Midwest brought relief to drought-hit soy crop, easing some concerns of tighter oilseed supplies.

Investors were also left disappointed after the U.S. Federal Reserve stopped short of signalling fresh monetary stimulus, and are now looking ahead to the European Central Bank meeting later in the day for major policy action.

"The market is pretty much disappointed that so far there's no promise coming from the Fed," said Ker Chung Yang, commodities analyst with Phillip Futures in Singapore.   

"Also, we have been talking about the U.S. dry weather for so long. The weather effect is no longer a bull factor for oilseeds but when the weather changes it becomes a bear factor."

The benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange ended one ringgit higher at 2,946 ringgit ($944) per tonne, supported by last-minute buying. Prices earlier touched a low at 2,905 ringgit, a level last seen on July 27.

Traded volumes stood at 23,869 lots of 25 tonnes each, slightly lower than the usual 25,000 lots.

A better chance of rain was expected late this week in portions of the drought-stricken U.S. Midwest, bringing some relief to the struggling soybean crops, an agricultural meteorologist said on Wednesday.

Market players have been pricing in the damage done by the relentless drought on soybean crops in the United States that squeezed soybean oil supply.

A drop in soybean oil supply could shift more vegetable oil demand to the cheaper palm oil.

Traders are looking out for July stock figures in No.2 producer Malaysia, which could climb on slowing exports and better production.

Malaysian palm oil exports fell by 15 percent and 19 percent in July from a month ago, according to cargo surveyors Intertek Testing Services and Societe Generale de Surveillance respectively. 

While the U.S crop scares appear to be receding, traders are eyeing El Nino's dry weather pattern which could return to Southeast Asia by end of this year and hurt production for top exporters Indonesia and Malaysia.

Brent crude rose above $106 barrel on Thursday as investors looked to Europe for policy easing measures after the U.S. Federal Reserve dashed their hopes by deferring fresh monetary stimulus.

In other vegetable oil markets, the most active U.S. soyoil contract for December delivery had gained 0.7 percent by 1011 GMT. The most active January 2013 soyoil contract  on the Dalian Commodity Exchange closed 0.8 percent lower. 

  Palm and soy oil prices at 1012 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      AUG2    2908   -14.00    2890    2910     227
  MY PALM OIL      SEP2    2920   -12.00    2899    2935    2454
  MY PALM OIL      OCT2    2946    +1.00    2905    2948   15583
  CHINA PALM OLEIN JAN3    7768  -118.00    7696    7810  326368
  CHINA SOYOIL     JAN3    9510   -78.00    9434    9516  420110
  CBOT SOY OIL     DEC2   52.94    +0.38   52.50   53.17    6885

  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=3.12 Malaysian ringgit