14/03/2013 (Reuters) - Malaysian palm oil futures slipped to a two-month low on Wednesday as weakness persisted in overseas soybean markets, although traders said easing palm oil output should provide some support.

U.S. soybean prices have been pressured by weak export demand, which also weighed on soybean oil, with China's soybean oil losing more than 3 percent so far this week.

Palm oil tends to track soybean oil prices closely as the commodities are used as substitutes for one another. But traders said a decline in production in February that may continue this month could provide some support for palm oil prices.    

"Liquidation persists in futures, although some traders think it is funds-related," said a trader with a commodities brokerage in Malaysia. "The well-advertised supply constraints should keep fundamentals intact."

By Wednesday's close, the benchmark May contract on the Bursa Malaysia Derivatives Exchange had dropped 0.6 percent to 2,397 ringgit ($773) per tonne, slightly above its intraday low of 2,365 ringgit, a level unseen since January 14.

Total traded volume stood at 31,784 lots of 25 tonnes each, higher than the usual 25,000 lots.

Technicals showed Malaysian palm oil is expected to fall to 2,384 ringgit per tonne, said Reuters market analyst Wang Tao based on a wave analysis.

But despite short-term weakness, market participants said palm oil fundamentals remained intact, on hopes that stocks will continue to ease on lower production and a demand recovery.

Malaysian palm oil stocks fell to 2.44 million tonnes in February from 2.58 million in January, thanks largely to a near 20 percent drop in production.

Export demand for the March 1-10 period was flat with a month ago, with traders now shifting their focus to the March 1-15 data due on Friday for a better indication of the demand trend. 

Crude palm oil shipments fell by more than half after Malaysia raised its export tax for the grade to 4.5 percent from zero percent. Top rival Indonesia increased its tariff to 10.5 percent from 9 percent for the month.

In other markets, Brent futures eased on Wednesday as Asian equities lost ground on concerns their recent rally was running out of steam, but expectations of steady global consumption growth and a surprise fall in U.S. stockpiles held the benchmark above $109 a barrel.     

In other vegetable oil markets, U.S. soyoil for May delivery edged down 0.4 percent in late Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange lost 1.8 percent.

  Palm, soy and crude oil prices at 1045 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      MAR3    2375   -18.00    2375    2375       4
  MY PALM OIL      APR3    2393   -18.00    2360    2393    1843
  MY PALM OIL      MAY3    2399   -14.00    2365    2402   14265
  CHINA PALM OLEIN SEP3    6340  -206.00    6336    6510  654390
  CHINA SOYOIL     SEP3    8042  -148.00    8012    8158  989642
  CBOT SOY OIL     MAY3   49.78    -0.20   49.65   50.06    6983
  NYMEX CRUDE      APR3   92.82    +0.28   92.47   92.98   20517

  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)