KUALA LUMPUR, Aug 2 (Reuters) - Malaysian palm oil futures retreated bymidday on Thursday due to overnight falls on the Chicago Board of Trade(CBOT).The benchmark third-month October contract was down 13 ringgit at 1,255ringgit ($330.26) a tonne after trading as high as 1,271 ringgit.Volume was thin at 844 lots, compared with 3,463 lots at the close onWednesday.Some traders said the market's uptrend remained intact because ofexpectations of lower output in the coming months and a stronger rupiahcurrency, which would make Indonesian palm oil less competitive.There was also talks private forecaster Ivan Wong will release hisestimates for July output, end-month stocks and exports on Friday.But some traders in Indonesia, the world's second largest palm oilproducer after Malaysia, said they had yet to factor in recent rupiahgains into prices."I would say our crude palm oil (CPO) prices are still about $5 cheapercompared with Malaysia's. By-products are even cheaper with the discountreaching more than $10," said one trader in Jakarta.Many Indonesian traders said they had to offer discounts because ofcongestion at ports such as Belawan and Dumai on the island of Sumatra,where most palm oil growing areas are found.Others said some exporters were offering more shipments from Jakarta onthe main island of Java and Pontianak on Borneo.Crude palm oil ex Belawan in Sumatra was quoted at $340/tonne for August,$345 for September and at $350 for October.In Malaysia, physical August crude palm oil for the southern and centralregions was offered at 1,255 ringgit a tonne against bids at 1,250. Tradeswere reported at 1,245 to 1,250 ringgit for both regions.Physical September CPO for the southern and central regions saw offers at1,265 ringgit against bids of 1,255. No deals were reported.Among refined products, August/September RBD palm oil was offered at $350a tonne and October/November/December at $355.Offers for August/September RBD olein were made at $370 andOctober/November/December at $375.August/September RBD palm stearin was offered at $290 andOctober/November/December at 292.50, while August palm fatty aciddistillate was offered at $215.