* Palm oil prices capped by high inventory levels * Global dependency on palm oil seen rising in next 12 months-Oil World * Weak palm oil prices likely in medium term -HSBC (Updates prices, adds details) By Anuradha Raghu KUALA LUMPUR, Sept 5 (Reuters) - Malaysian crude palm oil prices slipped on Wednesday to a one-week low on market expectations of rising stockpiles in the world's second biggest producer. Palm oil prices have been treading water even though the U.S. soy market hit a record high the previous day, as traders expect the Malaysian August data, due next Monday, to show stocks had climbed to their highest in nine months as still-high production offset strong exports. "The upside will be capped by the coming Malaysian Palm Oil Board inventory data, which we expect will remain above the psychological range of 2 million tonnes," Kenanga Investment's analyst Alan Lim Seong Chun said in a note. "On the other hand, the downside will be supported by crude palm oil's above-average discount of $290 per tonne against soybean oil," he added. Higher soybean and soybean oil prices mean consumers are likely to turn to substitutes such as palm oil. The benchmark November contract on the Bursa Malaysia Derivatives Exchange fell 2.2 percent to 2,990 ringgit ($959) per tonne, its lowest level since Aug. 29. Total traded volume picked up to 32,372 lots of 25 tonnes each, higher than the usual 25,000 lots. Reuters analyst Wang Tao said technicals for palm oil looked neutral with a range of 3,032 to 3,093 ringgit per tonne, and an escape from the range will point a future direction. Higher palm oil stocks would help Malaysia cope with an anticipated increase in demand. Hamburg-based oilseeds analysts Oil World said global dependence on palm oil is expected to rise significantly in the next 12 months to compensate for insufficient supplies of other vegetable oils. But some fear that a sluggish global economy could weigh on consumption of the tropical oil. HSBC expects prices in the medium-term to be underpinned by weak industrial demand from major consumers China, India and Europe. In other vegetable oil markets, U.S. soyoil for December delivery fell 0.7 percent in late Asian trade and the most active January 2013 soyoil contract on the Dalian Commodity Exchange closed 0.7 percent lower. Palm, soy and crude oil prices at 1004 GMT Contract Month Last Change Low High Volume MY PALM OIL SEP2 2910 -30.00 2895 2935 195 MY PALM OIL OCT2 2938 -72.00 2938 3014 3159 MY PALM OIL NOV2 2990 -68.00 2989 3077 16927 CHINA PALM OLEIN JAN3 8200 -64.00 8140 8302 389608 CHINA SOYOIL JAN3 10180 -74.00 10156 10264 446016 CBOT SOY OIL DEC2 57.85 -0.37 57.66 58.24 6737 NYMEX CRUDE OCT2 95.15 -0.15 94.71 95.62 21190 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 = 3.1165 Malaysian ringgit)

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