10/06/2011 (Business Recorder) - Malaysian palm oil reversed gains to briefly touch a one-month low late on Thursday, as a bout of technical selling weighed and investors positioned themselves ahead of the release of a flurry of agriculture data.

The benchmark August crude palm oil contract on the Bursa Malaysia Derivatives Exchange fell more than 3 percent at one point to 3,213 Malaysian ringgit ($1,065) a tonne, a level not seen since May 9.

In a volatile late session, prices closed at 3,287 ringgit.

"There is some technical selling," said an Indonesian trader. "Tonight we will see the USDA report and tomorrow the MPOB...the stocks numbers are the most important.

"If production continues to be good, then it will put big pressure on stocks."

Analysts expect the US Department of Agriculture (USDA) monthly supply and demand report at 1230 GMT to cut the end 2010/11 estimate for US corn stocks to 706 million bushels, from 730 million bushels forecast in May.

Traded volume for the benchmark month stood at more than a two-week high at 15,813 lots of 25 tonnes each, versus 11,605 lots on Wednesday.

US soyoil for July delivery and China's most-active January 2012 soybean oil were also weaker.

Investors are are also looking to the Malaysian Palm Oil Board, which is due to release stocks, export and production numbers on Friday.

Stocks in Malaysia are seen rising to a 16-month high in May as production jumps, although traders are waiting to see if cargo surveyors show strong demand from buyers eager to restock on the current price correction.

"It's a flip of a coin," added the trader. "Any number below 1.6 (million) would be considered on the friendly side."

Also on Friday cargo surveyors Intertek Testing Services and Societe Generale de Surveillance are scheduled to issue June 1-10 palm oil export numbers.

"I see prices moving north," said a palm oil analyst on the second half of 2011. "There is no room for any setback in production, so anything that crops up -- like weather -- will be a positive catalyst for prices.