* Malaysia approves cut in crude palm oil export tax -govt source * Palm oil faces resistance at 2,503 ringgit -technicals * Prices head for 1st weekly gain after 3 weeks of losses * Coming Up: USDA supply-demand report; 1230 GMT (Updates prices, quote) By Chew Yee Kiat SINGAPORE, Oct 11 (Reuters) - Malaysian palm futures rose on Thursday to their highest in more than a week, as a government plan to cut an export tax on crude palm oil offset record stockpiles and weak exports, while traders took positions ahead of a key U.S. report on demand and supply. Malaysia has approved a plan to slash export taxes from the current level of 23 percent per tonne and will discuss the size of the cut on Friday, a government source said. The move could boost Malaysia's crude exports and help ease stockpiles from a record of 2.48 million tonnes in September. "We believe that most of the negative news from the high inventory level has been priced in as crude palm oil prices are currently at a high discount of $350 per tonne against soybean oil," said Alan Lim Seong Chun, research analyst with Malaysia's Kenanga Investment Bank, in a note. The benchmark December contract on the Bursa Malaysia Derivatives Exchange gained 2.7 percent to close at 2,523 ringgit ($822) per tonne, just off an earlier high of 2,525 ringgit, a level last seen on Oct. 1. Total traded volumes stood at 41,253 lots of 25 tonnes each, far higher than the usual 25,000 lots. Technicals showed palm oil faces resistance at 2,503 ringgit per tonne, a break above which will open the way towards 2,588 ringgit, according to Reuters market analyst Wang Tao. Traders are taking positions ahead of the October supply and demand report by the U.S. Department of Agriculture due at 1230 GMT, which is likely to show a larger U.S. soybean crop than initially expected. A bigger crop of soybeans to be crushed into soybean oil could shift demand away from palm oil. Palm oil stocks hit an all-time high in September, thanks to record production, but prices are heading for their first weekly gain after three weeks of losses, further suggesting the sharp rise in inventory may already have been factored in. "The worst may be over, with palm oil production starting on a seasonal downcycle, which should ease the high stockpile," Alvin Tai, an analyst with Malaysia's OSK Investment Bank, said in a research note. "We note that Q4 tends to be the best quarter for both the palm oil price and plantation stocks." In a bullish sign for palm oil, Brent crude oil headed on Thursday for its highest close in a month, lifted by escalating tension between Syria and Turkey, maintenance in the North Sea and a supply crunch in oil products. In other vegetable oil markets, U.S. soyoil for December delivery was up 1.4 percent. The most active January 2013 soybean oil contract on the Dalian Commodity Exchange closed 0.2 percent higher. Palm, soy and crude oil prices at 1008 GMT Contract Month Last Change Low High Volume MY PALM OIL OCT2 2400 +121.00 2300 2400 283 MY PALM OIL NOV2 2453 +68.00 2391 2453 509 MY PALM OIL DEC2 2523 +66.00 2442 2525 22481 CHINA PALM OLEIN JAN3 7000 -8.00 6930 7038 477136 CHINA SOYOIL JAN3 9210 +16.00 9164 9252 457478 CBOT SOY OIL DEC2 51.36 +0.72 50.59 51.50 13256 NYMEX CRUDE NOV2 91.91 +0.66 91.09 91.99 22415 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=3.0675 ringgit)

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