(Corrects paragraph 8 to show that palm oil inventories snapped four months of losses, not gains) * Futures touch 2,820 ringgit, lowest since Oct 18, 2011 * Better soybean crop condition could lead to higher oilseed supply * Palm oil may hover above 2,838 ringgit -technicals * Coming up: Malaysia Aug 1-15 export data on Wednesday By Chew Yee Kiat SINGAPORE, Aug 14 (Reuters) - Malaysian crude palm oil futures hit a fresh 10-month low on Tuesday as improving output and slower exports in the Southeast Asian country stirred concerns over swelling stocks. Recent rains in the U.S. that could raise harvest forecasts for soybeans also helped ease some concerns over tightening global oilseed supply and weighed on edible oil markets in Asian trade Traders also avoided taking long positions ahead of export data for the first half of August due on Wednesday. "Tomorrow's exports are unlikely to be good, and production could climb even higher in August. Prices should be supported at the 2,800-ringgit level," said a dealer with a foreign commodities brokerage in Malaysia. By the midday break, the benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange dropped 1.3 percent to 2,835 ringgit ($909). The contract earlier touched a low at 2,820 ringgit, a level unseen since Oct 18 last year. Total traded volumes were thin at 9,949 lots of 25 tonnes each, compared to the usual 12,500 lots. Palm oil technically faces a support at 2,838 ringgit, and may hover above this level for another session, Reuters market analyst Wang Tao said. Malaysia's palm oil inventory level touched its highest since February at nearly two million tonnes in July, snapping four straight months of losses, thanks to improving output and lacklustre demand. But rising production may not last till the end of the year with as Australia's weather bureau said El Nino was in its early stages, potentially bringing dry weather to Southeast Asia and hurting some palm oil output. The market will be watching fresh export data on Wednesday after a sluggish showing for the first 10 days of August. Weaker demand from China and Europe has also weighed on Indonesia as the top palm oil producer lowered its estimate for exports to 17.6 million tonnes in 2012, an official from the Indonesian Palm Oil Association (GAPKI) said late on Monday. Brent futures held steady above $113 on Tuesday as investors awaited GDP data out of two of Europe's powerhouse economies to gauge the region's energy demand outlook, while tensions in the Middle East supported prices. Other vegetable markets traded lower as the U.S. soybean crop condition improved. By 0522 GMT, the most active U.S. soyoil contract for December delivery had lost 0.5 percent and the most active January 2013 soyoil contract on the Dalian Commodity Exchange had lost 0.8 percent. "The U.S. dry weather situation has eased a little. Hopefully we can expect better soybean crop condition in coming months," said Huang Zhi Qiang, an analyst with Guotai Junan Futures in Shanghai. Palm, soy and crude oil prices at 0522 GMT Contract Month Last Change Low High Volume MY PALM OIL AUG2 2787 -30.00 2787 2787 16 MY PALM OIL SEP2 2784 -46.00 2776 2799 29 MY PALM OIL OCT2 2835 -36.00 2820 2860 6768 CHINA PALM OLEIN JAN3 7636 -142.00 7634 7748 195258 CHINA SOYOIL JAN3 9664 -80.00 9658 9716 326146 CBOT SOY OIL DEC2 53.49 -0.26 53.48 53.85 2700 NYMEX CRUDE SEP2 92.84 +0.11 92.56 93.00 4721 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=3.12 Malaysian ringgit)

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