24/08/2012 (Reuters) -  Malaysian crude palm oil futures edged off a one-month high on Thursday, as traders turned cautious over demand prospects, with the worst drought in the U.S. Midwest in 56 years pushing oilseed prices higher.

Palm oil futures have been riding on the back of weather-fuelled gains in the soybean oil market after a long weekend holiday and strong export demand, but traders said the price rally might not be sustainable.

"The market looks a little toppish. The current high prices will certainly hurt demand," said a trader with a domestic commodities brokerage in Malaysia.

"We are also entering the peak palm oil production months of September and October, which could cap any major rallies."

The benchmark November 2012 contract on the Bursa Malaysia Derivatives Exchange lost 0.6 percent to close at 3,061 ringgit ($990) per tonne. Prices had earlier hit a high of 3,100 ringgit, a level last seen on July 17.

Total traded volumes soared to 43,207 lots of 25 tonnes each after the midday break, compared to the usual 25,000 lots.Technicals appear to be supportive. Palm oil will rise to 3,183 ringgit per tonne as it has broken above a resistance at 3,044 ringgit, said Reuters market analyst Wang Tao.

Demand for the edible oil has been resilient, with Malaysia's palm oil exports rising 6 percent for the Aug 1-20 period from a month ago on higher shipments to China and India, cargo surveyor Intertek Testing Services said on Wednesday.

Another cargo surveyor, Societe Generale de Surveillance will release Aug 1-20 data, together with Aug 1-25 data, on Monday.

The worst drought in the United States in more than half a century that damaged soybean crop prospects remained in focus as a smaller supply of soybean oil could shift more demand to the cheaper palm oil.

Planters are also concerned by weather woes closer to Southeast Asia, where a possible return of El Nino by the end of the year could hurt oil palm yields for major producers Indonesia and Malaysia.

Oil prices rose on Thursday to top $116 a barrel on renewed hopes for a third round of monetary stimulus by the U.S. Federal Reserve despite weak economic data from China.

In other vegetable oil markets, the most active U.S. soyoil contract for December delivery lost 0.3 percent by 1002 GMT. The most active January 2013 soyoil contract on the Dalian Commodity Exchange ended up 0.2 percent.

  Palm, soy and crude oil prices at 1002 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      SEP2    3017    +9.00    3010    3059     351
  MY PALM OIL      OCT2    3041    -7.00    3029    3069    8483
  MY PALM OIL      NOV2    3061   -17.00    3052    3100   20426
  CHINA PALM OLEIN JAN3    8084   +94.00    8022    8150  312612
  CHINA SOYOIL     JAN3    9952   +16.00    9938   10036  436926
  CBOT SOY OIL     DEC2   56.66    -0.17   56.55   57.05   10239
  NYMEX CRUDE      OCT2   98.03    +0.77   97.17   98.29   23078

  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=3.09 ringgit)