VEGOILS-Palm slides to near 2-1/2-mth low on higher output forecasts

(Updates prices, tweaks first paragraph, adds Indonesian output survey)

* Prices touch 2,118 rgt, lowest since Jan. 30

* Malaysian March palm output seen up 27 pct - growers' estimate

* Indonesian March crude palm oil output seen up 17 pct m/m - Reuters survey

* Palm oil to fall to 2,106 ringgit -technicals

By Anuradha Raghu

KUALA LUMPUR, April 9 (Reuters) - Malaysian palm oil futures fell for a third day on Thursday to a near 2-1/2-month low as estimates of a

surge in crude palm oil production in the world's top growers increased fears that supplies would overwhelm lacklustre demand.

The Malaysian Palm Oil Association (MPOA), a group of planters in the world's No.2 producer, said it expected total palm output in March

to have jumped 27.1 percent to 1.43 million tonnes as yields in both the Peninsular and Borneo regions recovered after monsoon floods.

A median forecast in a Reuters poll had pegged an 18 percent increase in output at 1.32 million tonnes. Official data on Malaysia's palm

output, end-stocks and exports will be released on Friday by industry regulator Malaysian Palm Oil Board.

"MPOA surprised us in terms of the magnitude of the increase," said David Ng of Phillip Futures in Kuala Lumpur.

"Production of 1.43 million tonnes is actually very high. A lot of traders are trying to reduce their risky positions - some are

short-covering, which pushed the market even lower."

The benchmark June contract on the Bursa Malaysia Derivatives fell to 2,118 ringgit on Thursday, its lowest since Jan. 30,

before settling at 2,120 ringgit ($585) a tonne by the day's close, down 2.1 percent.

Total traded volume stood at 51,055 lots of 25 tonnes, much hither than the usual 35,000 lots.

In top grower Indonesia, crude palm oil output likely rose 17 percent to 2.397 million tonnes in March, its highest level since

September, a Reuters survey of leading industry officials showed. The increase was partly due to more number of available working days on

plantations, poll respondents said.

In other markets, oil prices rallied more than 2 percent on Thursday, clawing back part of a 6 percent slump triggered by a jump in U.S.

crude inventories and record Saudi output, although analysts said sentiment remained bearish.

In other competing vegetable oil markets, the U.S. soyoil May contract lost 0.8 percent in late Asian trade, while the most active

September soybean oil contract on the Dalian Commodity Exchange fell 1 percent.

Weaker prices of soyoil, palm's edible oil rival, may prompt price-sensitive buyers to shift demand to soy instead.

Palm, soy and crude oil prices at 1027 GMT

Contract Month Last Change Low High Volume

MY PALM OIL APR5 0 +0.00 2150 0 0

MY PALM OIL MAY5 2124 -47.00 2124 2161 2180

MY PALM OIL JUN5 2120 -46.00 2118 2160 29918

CHINA PALM OLEIN SEP5 4656 -58.00 4648 4702 365568

CHINA SOYOIL SEP5 5366 -52.00 5360 5406 370920

CBOT SOY OIL MAY5 30.67 -4.60 30.67 30.95 10193

INDIA PALM OIL APR5 434.00 -4.60 433.70 437.00 868

INDIA SOYOIL APR5 599.70 -5.15 599.50 605.50 9765

NYMEX CRUDE MAY5 51.79 +1.37 50.86 51.86 36413

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

India soy oil in Indian rupee per 10 kg

Crude in U.S. dollars per barrel

($1 = 3.6270 Malaysian ringgit)

($1 = 6.2060 Chinese yuan)

($1 = 62.23 Indian rupee)

(Editing by Biju Dwarakanath)