15/08/2012 (Reuters) - Malaysian crude palm oil futures hit a fresh 10-month low on Tuesday as improving output and slower exports in the Southeast Asian country stirred concerns over swelling stocks.

On top of that, recent rains in the United States that could raise harvest forecasts for soybeans helped ease some concerns over tightening global oilseed supply and weighed on edible oil markets in Asian trade.

Traders also avoided taking long positions ahead of export data for the first half of August due on Wednesday.

"Tomorrow's exports are unlikely to be good, and production could climb even higher in August. Prices should be supported at the 2,800-ringgit level," said a dealer with a foreign commodities brokerage in Malaysia.

At closing, benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange dropped 0.5 percent to 2,858 ringgit ($918). The contract earlier touched a low of 2,820 ringgit, a level not seen since Oct 18 last year.

Total traded volumes were high at 31,724 lots of 25 tonnes each, compared to the usual 25,000 lots.

On the technicals front, palm oil has support at 2,838 ringgit, said Reuters market analyst Wang Tao.

Malaysia's palm oil inventory level touched its highest since February at nearly two million tonnes in July, snapping four straight months of losses, thanks to improving output and lacklustre demand.

But rising production may not last till the end of the year with Australia's weather bureau on Tuesday saying El Nino was in its early stages, potentially bringing dry weather to Southeast Asia and hurting some palm oil output.

The market will be watching fresh export data on Wednesday after a sluggish showing for the first 10 days of August.

Weaker demand from China and Europe has also weighed on Indonesia as the top palm oil producer lowered its estimate for exports to 17.6 million tonnes in 2012, an official from the Indonesian Palm Oil Association (GAPKI) said late on Monday.

Brent crude held steady above $113 per barrel on Tuesday as investors awaited data out of Europe to gauge the region's energy demand outlook, while escalating tensions in the Middle East supported prices.

Other vegetable markets traded lower as the U.S. soybean crop condition improved. By 1006 GMT, the most active U.S. soyoil contract for December delivery had lost 0.1 percent and the most active January 2013 soyoil contract  on the Dalian Commodity Exchange had lost 0.6 percent. 

"The U.S. dry weather situation has eased a little. Hopefully we can expect better soybean crop conditions in coming months," said Huang Zhi Qiang, an analyst with Guotai Junan Futures in Shanghai.        

  Palm, soy and crude oil prices at 1006 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      AUG2    2787   -30.00    2787    2787      16
  MY PALM OIL      SEP2    2811   -19.00    2776    2815    1199
  MY PALM OIL      OCT2    2858   -13.00    2820    2860   15347
  CHINA PALM OLEIN JAN3    7690   -88.00    7588    7748  403238
  CHINA SOYOIL     JAN3    9684   -60.00    9608    9716  648882
  CBOT SOY OIL     DEC2   53.69    -0.07   53.39   53.85    5959
  NYMEX CRUDE      SEP2   93.04    +0.31   92.56   93.53   17600

  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=3.11 Malaysian ringgit)