16/01/2012 (Reuters) - Malaysian crude palm oil futures slipped on Friday as a much-anticipated U.S. crop report showed a higher-than-expected forecast of oilseed supplies, temporarily overshadowing prospects of lower production due to erratic weather.

The U.S. Department of Agriculture January crop report painted a rosier picture for global supplies on Thursday, while the Malaysian Palm Oil Board said this week that December stock levels were higher than expected.

"With both the highly anticipated reports disappointing the bulls, the market will henceforth look at fundamentals," said a trader with a domestic commodities brokerage in Malaysia.

Benchmark March palm oil futures on the Bursa Malaysia Derivatives Exchange fell 1.6 percent to close at 3,151 ringgit ($1,007) per tonne. Prices earlier touched an intraday low of 3,143 ringgit, a level last seen on Dec. 29.

Traded volumes stood at 30,727 lots of 25 tonnes each, higher than the usual 25,000 lots for the first time in the week.

Palm oil futures will clear a support at 3,176 ringgit per tonne to head towards 3,140 ringgit thereafter, based on technical analysis, Reuters market analyst Wang Tao said.

While the bearish USDA report sent the markets lower, weather concerns should continue to provide support for oilseed prices.

"Soybean losses were smaller than those for corn or wheat as it found underlying support from continued worries about damage to Argentina's soybean crop due to hot, dry weather," said Abah Ofon, agricultural commodities analyst with Standard Chartered Bank in Singapore.

Similarly for palm oil, traders are keeping a close watch on wet weather in key exporter Malaysia as floods could disrupt production, adding pressure to tightening stocks.

The Malaysian weather office upgraded its heavy rain warning to orange from yellow for Pahang and Johor, key oil palm producing states that account for 30 percent of national output.

The industry expects January production levels to be lower but demand is expected to follow suit. 

Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance reported a 14 and 19 percent drop in Malaysia's palm oil exports for first 10 days in January.

The cargo surveyors will release exports data for Jan. 1-15 on Monday. In related markets, Brent crude rose to close to $112 a barrel on Friday, adding to the previous day's rally on the prospect of Nigeria's oil unions halting the sector from Sunday, part of a national strike against the end of fuel subsidies.

The bearish USDA report also weighed on some vegetable oil markets.

The most active U.S. soyoil contract for March delivery was slightly up after earlier losses while the most active September 2012 soyoil contract on China's Dalian commodity exchange lost 0.8 percent.

"Historically speaking, the price movement following the January report may last a while, maybe 1-2 weeks. But the South American weather still remains a concern for the soyoil market," said Huang Zhi Qiang from Guotai Junan Futures in Shanghai.

Palm, soy and crude oil prices at 1003 GMT

Palm, soy and crude oil prices at 1003 GMT
                                                                   
  Contract                        Month    Last   Change   Low    High  Volume
  MY PALM OIL                JAN2    3140   -67.00     3140    3140       4
  MY PALM OIL               FEB2    3151   -69.00     3148    3190    2185
  MY PALM OIL              MAR2    3151   -51.00     3143    3186   14279
  CHINA PALM OLEIN SEP2     8040  -102.00    8032    8110   67744
  CHINA SOYOIL          SEP2     9004    -70.00    8988    9050  226790
  CBOT SOY OIL          MAR2     51.47    +0.01    51.19   51.75    7577
  NYMEX CRUDE        FEB2     99.84    +0.74     99.12  100.19   19606
                                                                   
  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=3.13 ringgit)