* Sluggish export demand weighs on market
* Palm heads for fifth straight weekly fall
* Sharp falls in China hurt confidence-dealer

08/07/2016 (Reuters) - Malaysian palm oil futures fell5.5 percent on Friday to their lowest level in nine months,following losses in rival soyoil and on sluggish export demand.

Benchmark palm oil futures for September delivery on the Bursa Malaysia Derivatives Exchange were down3.7 percent at 2,268 ringgit ($561.80) per tonne as of 0811 GMT,after falling as much as 5.6 percent earlier in the day to 2,223ringgit, the lowest level since Oct. 9, 2015.

They have lost 3.9 percent so far this week, heading fortheir fifth straight weekly fall.

"Palm oil is catching up with soyoil. For the last two daysU.S. soyoil has been correcting. Palm has to correct in the sameproportion to remain competitive," said a Kuala Lumpur-basedtrader.

Malaysian palm oil market was closed on Wednesday andThursday for Eid celebrations.

"The sharp fall in the Chinese market has shatteredconfidence. Traders are closing their long positions," said adealer.

The September contract for soybean oil, a substitute forpalm oil, on the Dalian Commodity Exchange fell 0.47percent, while the most actively traded September contract for palm olein declined 1.64 percent.

China is the world's second largest palm oil consumingcountry after India.

U.S. soyoil futures fell 3.7 percent in the previoustwo sessions.

Higher stockpiles in Malaysia could also dent palm oilprices, forecast a Reuters poll of eight traders, analysts andplanters. The survey showed inventories likely rose 7.4 percentto 1.77 million tonnes in June, while exports slumped 6.4percent from May.

Output is seen rising for a fourth consecutive month in linewith seasonal trend to reach 1.51 million tonnes. (MYPOMP-CPOTT)
($1 = 4.0370 ringgit)
($1 = 67.3700 Indian rupees)
($1 = 6.6885 Chinese yuan )