13/03/2013 (Reuters) - Malaysian palm oil futures edged lower on Tuesday, tracking  weaker overseas soybean oil markets, although a fall in palm oil stockpiles helped keep losses in check.

U.S. soybeans dropped on Tuesday after data from the U.S. Department of Agriculture showed slower export demand for the oilseed, also weighing on soybean oil markets.   

U.S. soyoil for May delivery edged down 0.8 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodity Exchange fell 1.1percent, extending losses to its lowest since July 2010.

"The palm market is weaker on the back of CBOT and Dalian soybean oil but it should be supported at 2,400 ringgit," said a trader with a foreign commodities brokerage in Malaysia.

"Production should go down further and exports should be slightly better than last month, so we expect to see further drawdown in stocks."    

By Tuesday's close, the benchmark May contract on the Bursa Malaysia Derivatives Exchange had inched down 1.6 percent to 2,412 ringgit ($775) per tonne. Prices traded in a range between 2,406 and 2,442 ringgit.

Total traded volume stood at 39,868 lots of 25 tonnes each, higher than the usual 25,000 lots.

Technicals showed palm oil is expected to retrace to 2,390 ringgit per tonne, as it did not break a resistance zone of 2,450 to 2,476 ringgit, Reuters market analyst Wang Tao said.

But despite short-term weakness, analysts expect prices to pick up, as palm oil stocks continue to ease on lower production and a demand recovery.

"We continue to expect crude palm oil prices to trade higher in the coming months. After the current low-yield season, palm oil closing stocks are expected to continue to trend lower on demand recovery, boosted by an abnormally high discount to soybean oil," Malaysia's Affin Investment Bank said in a research note on Tuesday.

Palm oil stocks in the world's second-largest producer of the tropical oil fell to 2.44 million tonnes in February from 2.58 million in January, industry regulator the Malaysian Palm Oil Board said on Monday.

Cargo surveyors reported growth in exports to be almost flat for the March 1-10 period from a month ago, and traders will be looking out for export data for the first half of the month, due on Friday, to further gauge the demand trend.

In other markets, Brent futures slipped below $110 a barrel on Tuesday on worries of a slowdown in demand growth in China and the United States, two of the world's biggest oil consumers, with a rise in the dollar weighing further on the market.

  Palm, soy and crude oil prices at 1008 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      MAR3    2380   -60.00    2380    2418     214
  MY PALM OIL      APR3    2409   -31.00    2402    2432    1983
  MY PALM OIL      MAY3    2412   -38.00    2406    2442   18575
  CHINA PALM OLEIN SEP3    6510   -90.00    6500    6602  570042
  CHINA SOYOIL     SEP3    8154   -94.00    8146    8232  747488
  CBOT SOY OIL     MAY3   50.06    -0.38   50.00   50.46    3948
  NYMEX CRUDE      APR3   91.84    -0.22   91.60   92.28   20398

  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=3.1 ringgit)