VEGOILS-Palm falls on profit-taking, but posts biggest weekly gain in seven

(Updates prices)

* Prices gain 0.8 pct this week, biggest rise in 7 weeks

* Profit-taking stretches into 2nd day, prices could test

2,600 rgt -trader

By Anuradha Raghu

KUALA LUMPUR, April 18 (Reuters) - Malaysian palm oil

futures edged lower in thin trade on Friday, as investors

continued to book profits from big gains earlier this week, with

weakness in overseas soy markets and a firm ringgit also

dragging.

Benchmark prices however notched a 0.8 percent gain this

week, their biggest rise since early March, lifted by

anticipation of a recovery in food and fuel demand for the

tropical oil.

"Today there's a continuation of yesterday's profit-taking

but without any serious volume involved," said a trader with a

foreign commodities brokerage.

"Given that the external market is weakening and our ringgit

is strengthening slightly, most likely the palm market will

continue its correction to test 2,600 ringgit."

By Friday's close, the benchmark July contract on

the Bursa Malaysia Derivatives Exchange had edged down 0.5

percent to 2,635 ringgit ($814) per tonne, with prices locked

between 2,623-2,653 ringgit.

Total traded volumes were thin at 18,509 lots of 25 tonnes,

about half the average 35,000 lots.

Most currency and equity markets are closed for the Good

Friday holiday and will reopen for trading next week.

Market players are watching for Malaysian export data for

the April 1-20 period, which will be released by cargo surveyors

on Monday, to gauge global demand for the tropical oil.

Palm oil demand is expected to strengthen in April onwards

as buyers in India, Pakistan and the Middle East restock ahead

of the Muslim holy month of Ramadan in late June, followed by

the Eid al-Fitr celebrations in July.

"Demand will be reflected by the export figures next Monday.

From this period onwards exports should pick up, given that

March exports were so weak and also because of Ramadan demand,"

the trader added.

A strong Malaysian ringgit, however, could cap export sales

as it makes the ringgit-denominated feedstock more expensive for

overseas buyers. The ringgit was trading at 3.2390 against the

U.S. dollar late Friday.

Malaysia's overseas sales of palm oil products fell 8

percent to 1.24 million tonnes in March compared to a month ago,

missing market estimates for 1.30 million tonnes of shipments.

Talks of Chinese commodity buyers defaulting on soybean

cargoes also kept traders wary that the world's second-largest

edible oil buyer would also slow purchases of other vegetable

oils.

China's top soy buyer Shandong Sunrise Group told Reuters

that Chinese buyers may default on a further 1.2 million tonnes

of soybeans worth about $900 million being shipped from the

United States and South America, to avoid incurring huge losses

in a depressed local market.

The most active September soybean oil contract on

the Dalian Commodities Exchange fell 0.5 percent in late Asian

trade.

Palm, soy and crude oil prices at 1006 GMT

Contract Month Last Change Low High Volume

MY PALM OIL MAY4 2690 -22.00 2685 2714 271

MY PALM OIL JUN4 2650 -11.00 2635 2665 3667

MY PALM OIL JUL4 2635 -12.00 2623 2653 11203

CHINA PALM OLEIN SEP4 6190 -54.00 6164 6208 322750

CHINA SOYOIL SEP4 7038 -34.00 7008 7058 365526

CBOT SOY OIL JUL4 43.59 -0.34 43.44 43.94 50892

NYMEX CRUDE MAY4 104.30 +0.54 103.54 104.78 179888

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 = 3.239 Malaysian ringgit)

($1 = 6.2242 Chinese yuan)

(Editing by Joseph Radford and Anupama Dwivedi)