22/09/2012 (Reuters) - Malaysian palm oil futures dropped on Friday to their lowest in more than 11 months, posting their worst week since March last year as rising inventories and overnight losses in U.S. soybeans weighed on prices.

The brisk pace of the U.S. soybean harvest and global economic concerns dragged down palm oil prices, which have already come under pressure due to worries inventory levels in key producer Malaysia could climb above 2.2 million tonnes in September, which would be the highest level seen this year.

"The overseas market was down yesterday and this morning the Dalian market was down, so the futures market is under tremendous pressure on long liquidation and speculative short-selling," said a trader with a foreign commodities brokerage in Malaysia.

"Technicals also don't look good as prices broke below 2,800 ringgit with immediate support at 2,754 ringgit."

At the close, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had lost 2 percent to 2,763 ringgit ($905) per tonne, slightly above the intraday low at 2,755 ringgit, a level unseen since Oct. 6.

The prices broke below the 2,800-ringgit mark for the first time this year and posted a 5.9 percent loss this week.

Total traded volume stood at 37,030 lots of 25 tonnes each, much higher than the usual 25,000 tonnes.

Technicals continued to look bearish with Reuters market analyst Wang Tao saying palm oil would keep falling to 2,719 ringgit per tonne based on a wave analysis.

Latest cargo surveyor data pointed to rising exports but traders said the increase was not enough to offset strong production, which could push September stocks even higher than the 10-month high of 2.1 million tonnes seen in August.

Cargo surveyor Intertek Testing said export shipments rose almost 15 percent during Sept. 1-20 over the same period a month ago, while another cargo surveyor, Societe Generale de Surveillance, reported an almost 13 percent increase from a month ago.    

In a bullish sign for palm oil, Brent crude rose towards $111 on Friday, extending its gains from a 1-1/2 month low hit in the previous session, as Libya's precarious security situation and lower North Sea production stoked supply fears.

In other vegetable oil markets, U.S. soyoil for December delivery lost 0.2 percent. The most active January 2013 soyoil contract on the Dalian Commodity Exchange had closed 1.5 percent down.

Chicago Board of Trade November soybeans edged up, after dropping 3 percent in the previous session.

  Palm, soy and crude oil prices at 1006 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      OCT2    2593   -82.00    2556    2629       0
  MY PALM OIL      NOV2    2693   -82.00    2689    2759       0
  MY PALM OIL      DEC2    2763   -57.00    2755    2815       0
  CHINA PALM OLEIN JAN3    7614  -182.00    7606    7730  320744
  CHINA SOYOIL     JAN3    9738  -146.00    9720    9810  510238
  CBOT SOY OIL     DEC2   54.92    -0.13   54.82   55.46    8249
  NYMEX CRUDE      NOV2   92.96    +0.54   92.80   93.48   22842

  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=3.051 ringgit)