* Palm oil expected to peak at 2,883 ringgit -technicals * Benchmark prices hit 2,829 ringgit peak By Michael Taylor JAKARTA, March 4 (Reuters) - Malaysian palm oil futures were steady on Tuesday, trading near 17-month highs as comparative vegetable oils coupled with lower production expectations due to dry weather conditions, helped to firm up prices. By the midday break, the benchmark May contract on the Bursa Malaysia Derivatives Exchange climbed 0.3 percent to 2,813 ringgit ($860) per tonne. On Monday, prices hit 2,860 ringgit, their highest since Sept. 20, 2012. "The market seems to be holding quite well above 2,800," a trader with a foreign commodities brokerage said. "The underlying fundamental is still holding firm -- the weather worries." When the weather is very hot, palm oil production would be hit, he said, adding that biodiesel demand in the world's top palm producer Indonesia was also aiding benchmark prices. Concerns over dry weather tightening palm supplies in dominant Southeast Asian producers Indonesia and Malaysia have helped palm prices gain 6 percent this year. Market participants are keeping watch for price outlooks from key industry speakers at an industry conference in Kuala Lumpur that runs from March 3-5. Palm oil imports in China, a major buyer of the vegetable oil, are likely to take a hit in the coming months as stockpiles at major ports have risen to near record highs of around 1.2 million tonnes on weak domestic demand, traders told Reuters on the conference sidelines. The U.S. soyoil contract for May added 0.2 percent in early Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange also gained 0.2 percent. "We are still bullish on CPO (crude palm oil) prices as we expect sustained inventory downtrend through 1Q14 to hit 1.67m mt by end-March," Kenanga Investment Bank analyst Alan Lim Seong Chun said in a note. "We believe CPO (crude palm oil) prices are supported indirectly by concerns over the Ukraine crisis and the deteriorating outlook for Brazilian soybean production." In technicals, Malaysian palm oil is expected to peak around a resistance at 2,883 ringgit per tonne and start a deep correction thereafter, said Reuters market analyst Wang Tao. Total traded volume on Tuesday morning stood at 15,603 lots of 25 tonnes, slightly above the average 12,500 lots. In other markets, Brent crude held above $111, at its highest levels since the end of last year, as tensions over Russia's military intervention in Ukraine rattled global markets and stoked fears of energy supply disruption to Europe. Higher crude oil prices would increase demand for palm oil as an alternative feedstock to produce biofuels. Palm, soy and crude oil prices at 0553 GMT Contract Month Last Change Low High Volume MY PALM OIL MAR4 2800 -21.00 2800 2800 35 MY PALM OIL APR4 2811 -1.00 2793 2832 800 MY PALM OIL MAY4 2813 +7.00 2793 2829 9094 CHINA PALM OLEIN MAY4 6140 -28.00 6132 6192 107782 CHINA SOYOIL MAY4 6856 +10.00 6840 6898 111430 CBOT SOY OIL MAY4 42.45 +0.07 42.39 42.61 1833 NYMEX CRUDE APR4 104.74 -0.18 104.55 104.96 4897 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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