* Hits 2,456 rgt in late trade on estimates Oct output fell * Investors seen buying after growers' report -trader By Anuradha Raghu KUALA LUMPUR, Oct 22 (Reuters) - Malaysian palm oil futures climbed to a fresh one-and-a-half month high on Tuesday, reversing losses in the morning session on growers' estimates that output in the world's second-largest producer fell in October instead of peaking. Industry sources said figures from the Malaysian Palm Oil Association (MPOA), a group of planters, showed that production in Oct. 1-20 dropped 10.5 percent. An output fall would make September the highest-producing month this year and ease fears that palm oil stocks will surge in the coming months as bumper supply of global oilseeds from U.S and South America flood the market. "With these estimates, end-stocks will certainly remain below two million tonnes for the rest of the year. This prompted buyers to cover their short positions," said a trader with a local commodities brokerage in Malaysia. By Tuesday's close the benchmark January contract on the Bursa Malaysia Derivatives Exchange had risen 0.8 percent to 2,456 ringgit ($773) per tonne, the highest since Sept. 6. Prices in early trade had dipped to 2,420 ringgit. Total traded volume stood at 37,964 lots of 25 tonnes each, higher than the usual 35,000 lots as traders rushed to book positions. A group of millers in southern Malaysia also reported estimates of falling production for the Oct. 1-20 period, traders said. Weaker output could keep stocks down when buyers in China and Europe cut back on purchases of palm oil during winter because the edible oil clouds in cold temperatures. "At the moment exports look promising, but it could be lower next month onwards until December," said a trader with a foreign commodities brokerage. "But because production is not coming in heavy this year, I don't think there will be a build up in stocks," the trader added. Palm oil inventories at end-September stood at 1.78 million tonnes. Two reports by cargo surveyors showed exports of Malaysian palm oil during Oct. 1-20 rose 3 percent and 8 percent compared to the same period a month ago, boosted by buying from Europe, China and Pakistan. In other markets, U.S. crude oil fell below $99 a barrel on Tuesday to its lowest since early July after crude stockpiles rose more than expected in the world's top oil consumer, pushing the discount to North Sea Brent crude to its widest in six months. In competing vegetable oil markets, the U.S. soyoil contract for December fell 0.1 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange lost 1.1 percent. Palm, soy and crude oil prices at 1038 GMT Contract Month Last Change Low High Volume MY PALM OIL NOV3 2458 +26.00 2421 2458 419 MY PALM OIL DEC3 2458 +20.00 2422 2458 7352 MY PALM OIL JAN4 2456 +18.00 2420 2456 19719 CHINA PALM OLEIN MAY4 6106 -34.00 6084 6164 516742 CHINA SOYOIL MAY4 7176 -78.00 7162 7248 620186 CBOT SOY OIL DEC3 41.55 -0.09 41.20 41.72 9117 NYMEX CRUDE NOV3 98.90 -0.32 98.79 99.10 1164 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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