* Prices touch new low at 2,978 ringgit on profit-taking * Palm oil to drop more to 2,971 ringgit per tonne -technicals * Market eyes stock build in Malaysia palm oil sector * Indonesia sets crude palm export tax at 13.5 pct for Sept (Updates prices) By Chew Yee Kiat SINGAPORE, Aug 29 (Reuters) - Malaysian crude palm oil futures slipped to the lowest in nearly a fortnight, as traders booked profits with market focus shifting to rising stocks level in the world's second-largest producer. Palm oil posted two straight weeks of gains as the worst drought in 56 years ravaged soybean crops in the U.S. Midwest, limiting soybean oil supply and raising demand prospects of the cheaper palm oil. But prices have retreated by more than 2 percent this week, as market players eyed a build-up in Malaysian palm oil stocks on higher production in August. "At the moment we still see prices heading towards no-man's land, although my view is that it's more on the bearish side rather than a bullish front," said Ker Chung Yang, commodities analyst with Phillip Futures in Singapore. "Stocks are going to rise but the level I'm looking at is around 2.1-2.15 million tonnes." At closing, the benchmark November 2012 contract on the Bursa Malaysia Derivatives Exchange fell nearly 1 percent to 3,000 ringgit ($961) per tonne. Prices earlier hit 2,978 ringgit, the lowest level since Aug. 17. Total traded volume stood at 40,158 lots of 25 tonnes each, much higher than the usual 25,000 lots. Palm oil is expected to drop more to 2,971 ringgit per tonne to fill a gap formed on the hourly chart, said Reuters analyst Wang Tao. Malaysia's palm oil stocks in July rose 17.6 percent to close to 2 million tonnes, and traders expect stock levels to increase further in August on strong production growth. But resilient demand could help ease growth in stocks. Exports rose as much as 6.6 percent for the first 25 days of August from a month earlier, driven by shipments of tax-free crude grades and demand from India and China, cargo surveyor data showed. Exports of refined grades, however, fell compared to a month ago as more orders shifted to Indonesia on its favourable tax structure for refined products. The world's top palm oil producer will cut export tax for crude palm oil to 13.5 percent in September and lower the export tax for refined palm olein to 6 percent in September from 7 percent in August, a trade ministry official said on Wednesday. Brent crude futures slipped to $122 per barrel on Wednesday on expectations Hurricane Isaac, which hit land in Louisiana, left U.S. Gulf Coast oil production facilities without significant damage. In other vegetable oil markets, the most active U.S. soyoil contract for December delivery slipped 0.1 percent by 1005 GMT. The most active January 2013 soyoil contract on the Dalian Commodity Exchange closed 0.6 percent lower. Palm, soy and crude oil prices at 1005 GMT Contract Month Last Change Low High Volume MY PALM OIL SEP2 2915 -59.00 2913 2973 312 MY PALM OIL OCT2 2968 -32.00 2948 3015 3284 MY PALM OIL NOV2 3000 -29.00 2978 3039 24078 CHINA PALM OLEIN JAN3 8140 -72.00 8072 8218 320784 CHINA SOYOIL JAN3 9960 -62.00 9888 10014 521402 CBOT SOY OIL DEC2 56.35 -0.04 56.12 56.61 7925 NYMEX CRUDE OCT2 95.61 -0.72 95.44 96.30 16365 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

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