28/09/2012 (Reuters) - Malaysian palm oil futures ended off a 2-year low on Thursday, as investors remained cautious over high stocks and the eurozone debt crisis.

Traders said palm oil inventory in No.2 producer Malaysia could climb higher in September after reaching a 10-month high in August, as exports did not rise enough to offset high production.

Prices fell to 2,569 ringgit per tonne -- a fresh low since September 2010 -- before the midday break although prices recovered slightly on bargain hunting.

"The market is hitting new low on continuation of technical selling. Fundamentals are still bearish," said a trader with a foreign commodities brokerage in Malaysia.

"And you also have uncertainty about Europe on top of all these pressure. Immediate support is at 2,500 ringgit for today and tomorrow."

At the close, the benchmark December contract on the Bursa Malaysia Derivatives Exchange Lost 0.3 percent to 2,607 ringgit ($848) per tonne.

Total traded volumes stood at 36,301 lots of 25 tonnes each, slightly lower than the usual 25,000 lots.

Futures have lost almost 18 percent so far this year, on track for their worst performance since 2008. 

Investor sentiment was dampened by renewed uncertainty over a bailout for Spain while fresh signs emerged that Europe is struggling to find a unified approach to tackling its debt crisis as global lenders wrangled over Greek restructuring.

Market traders were cautious ahead of a U.S. Department of Agriculture report on Friday on season-end stocks of soybeans, which are expected to be at an 8-year low according to a Reuters poll.

That could kick in demand for palm oil and support prices that have come under pressure from large stocks seen in key producers Malaysia and Indonesia. Palm oil is used as a substitute for competing soyoil.

Oil held steady above $110 a barrel on Thursday on renewed worries over supply disruptions from the Middle East, while the escalating debt crisis in the euro zone reinforced concerns about demand and capped gains.

In other vegetable oil markets, U.S. soyoil for December delivery edged up 0.5 percent in late Asian trade.

The most active January 2013 soyoil contract on the Dalian Commodity Exchange lost 1.8 percent after touching its lowest level since June.      

  Palm, soy and crude oil prices at 1006 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      OCT2    2470   -10.00    2435    2481     292
  MY PALM OIL      NOV2    2545    +0.00    2504    2566    2201
  MY PALM OIL      DEC2    2607    -9.00    2569    2634   20418
  CHINA PALM OLEIN JAN3    7158  -106.00    7128    7244  342602
  CHINA SOYOIL     JAN3    9232  -170.00    9224    9314  535696
  CBOT SOY OIL     DEC2   52.35    +0.24   52.09   52.60   11291
  NYMEX CRUDE      NOV2   90.27    +0.29   89.88   90.55   19474

  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 = 3.075 ringgit)