20/09/2012 (Reuters) - Malaysian palm oil futures closed slightly lower on Wednesday, as last-minute selling on better-than-expected soybean yields in the United States offset gains boosted by expectations of strong export data.

Sentiment remains cautious after palm oil futures lost as much as 5.3 percent on Tuesday on reports that the U.S. Midwest soybean crop was not as badly damaged by drought as initially feared, and that the harvest was progressing fast.

Palm oil can be used as a substitute for soyoil.

Crude palm oil was likely to find an initial support at 2,840 ringgit a tonne, said Ker Chung Yang, an analyst with Phillip Futures, but prices were likely to fall further in tandem with soybeans.

"We may see some short-covering which may extend for another day, but we need to understand that the weakness is likely to persist for crude palm oil," said Ker.

The benchmark December contract on the Bursa Malaysia Derivatives Exchange fell 0.1 percent to close at 2,859 ringgit ($935). On Tuesday, prices touched a low of 2,827 ringgit, a level last seen on Aug. 15.ž

Total traded volume stood at 44,696 lots of 25 tonnes each, much higher than the usual 25,000 tonnes.

Technicals showed Malaysian palm oil likely to retest a support level at 2,832 ringgit per tonne, driven by a downward wave capable of travelling to 2,719 ringgit per tonne, Reuters market analyst Wang Tao said.  

Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance will announce on Thursday palm oil exports for the first 25 days of the month, but the expected sales hike may not be enough to calm worries about rising inventories.

"The export numbers are likely to continue to be impressive, but we need to understand that the sharp gain is due to the low base from the previous month," said Ker.

Exports for the first half of September rose 12 percent from a month ago, cargo surveyor data showed on Tuesday.

In a bullish sign for palm oil, Brent crude oil prices rose on Wednesday after Japan's central bank became the latest country to further open the monetary taps to help stimulate its economy.

In other vegetable oil markets, U.S. soyoil for December delivery rose 0.4 percent. The most active January 2013 soyoil contract on the Dalian Commodity Exchange closed 0.3 percent higher, recovering from previous day's near 1-month low.      

  Palm, soy and crude oil prices at 1010 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      OCT2    2705    -9.00    2698    2733     448
  MY PALM OIL      NOV2    2813   +10.00    2793    2836    6338
  MY PALM OIL      DEC2    2859    -2.00    2850    2889   23634
  CHINA PALM OLEIN JAN3    7802   +12.00    7774    7852  187498
  CHINA SOYOIL     JAN3    9876   +32.00    9854    9916  421778
  CBOT SOY OIL     DEC2   55.54    +0.21   55.23   55.98    8580
  NYMEX CRUDE      OCT2   95.04    -0.25   94.93   96.17    7482

  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