* Malaysia's July palm exports up 4.2 pct m/m -ITS * Prices post monthly drop at 4.5 pct, biggest since Feb (Updates prices) By Chew Yee Kiat SINGAPORE, July 31 (Reuters) - Malaysian palm oil futures rose to a one-week high on Wednesday, supported by a recovery in export demand, although gains were capped by prospects of higher global oilseed supplies. Exports of Malaysian palm oil products in July edged up 4.2 percent to 1,406,935 tonnes from 1,350,311 tonnes shipped during June, cargo surveyor Intertek Testing Services said. Traders said the reversal in exports trend from a 24 percent decline in the July 1-15 period provided some support for palm oil prices, which posted a 4.5 percent monthly loss amid projections for a bumper soy crop in the U.S. Midwest. "The full-month exports figure was surprisingly higher after weaker exports during the first half of the month. The demand recovery was partly why the market has been able to gain so fast and recover 100 ringgit within two days," said a trader with a foreign commodities brokerage in Kuala Lumpur. "But weakness in the grains complex means market participants are not going to be too optimistic." At market close, the benchmark October contract on the Bursa Malaysia Derivatives Exchange had edged up 1 percent to 2,238 ringgit ($690) per tonne. Prices earlier rose to as high as 2,245 ringgit, a level last seen on July 24. Total traded volume stood at 30,323 lots of 25 tonnes each, lower than the average 35,000 lots. Palm prices, which typically track soy markets in the United States and China, fell to the lowest in nearly 4 years this month as ideal weather conditions in the U.S. Midwest bolstered hopes for higher soybean oil supplies. But traders were pinning hopes on a weaker ringgit to bolster demand as the ringgit-priced feedstock becomes cheaper for overseas buyers and refiners. The Malaysian currency plunged to a three-year low against the dollar on Wednesday after rating agency Fitch downgraded the country's credit outlook. In other markets, Brent crude slipped towards $106 per barrel on Wednesday as investors awaited the outcome of a U.S. Federal Reserve meeting and economic data to gauge the oil demand outlook from the world's top consumer. In vegetable oil markets, the U.S. soyoil contract for December rose 0.8 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange gained 1.2 percent. Palm, soy and crude oil prices at 1004 GMT Contract Month Last Change Low High Volume MY PALM OIL AUG3 2280 -3.00 2270 2281 172 MY PALM OIL SEP3 2262 +6.00 2251 2281 2885 MY PALM OIL OCT3 2238 +23.00 2217 2245 18439 CHINA PALM OLEIN JAN4 5424 +90.00 5346 5468 672746 CHINA SOYOIL JAN4 7030 +86.00 6934 7064 941810 CBOT SOY OIL DEC3 43.03 +0.34 42.63 43.14 6972 NYMEX CRUDE SEP3 103.37 +0.29 103.08 103.73 20996 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=3.245 ringgit)

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