22/07/2011 (Nasdaq) - The October-delivery contract fell as much as 0.4 percent to 3,141 ringgit ($1,048) per metric ton on the Malaysia Derivatives Exchange, and ended the morning session little changed at 3,150 ringgit. Futures reached 3,164 ringgit earlier, the highest level since June 23.

Futures have lost 17 percent this year on prospects of bigger inventories as better weather resulted in higher output from Indonesia and Malaysia, the biggest producers. Malaysia will produce 18.6 million tons in 2011, up 16 percent from a three-year low last year, Oil World said in a report on July 19. Indonesia's output this year will rise 8.1 percent to 24 million tons, according to the report.

Indonesia's crude palm oil output this year is estimated at 22.5 million tons to 23 million tons, from 21.6 million tonnes in 2010, executive director of the Indonesian Palm Oil Producers Association (GAPKI) said on Thursday.

"There is an increase in productivity and also the harvest has started," Fadhil Hasan told Reuters on the sidelines of a seminar. Indonesia is the world's largest palm oil producer.

He expects Indonesia's year-end crude palm oil stocks to be at a normal level of 1.5 million tonnes to 2.0 million tons.

"I think the range is going to be like that. There won't be much change." Hasan also forecast Malaysia palm oil futures KPOc3 at 3,000-3,500 Malaysian Ringgit per ton in the second half of the year.

The benchmark October crude palm oil contract on Bursa Malaysia Derivatives was at 3,148 ringgit on Thursday.