VEGOILS-Palm ends off 2-month low, USDA report in focus

* Prices edge higher on short-covering ahead of USDA report
* Malaysia stocks up 17.6 percent, almost in line with
expecations
* Palm oil posts 5th straight weekly loss

(Updates throughout)
By Chew Yee Kiat
SINGAPORE, Aug 10 (Reuters) - Malaysian crude palm oil
futures ended off an 8-week low on Friday, and posted a fifth
straight weekly loss with traders positioning ahead of a key
report by the U.S. Department of Agriculture (USDA) later in the
day.
Palm oil initially went to its lowest since June 15 after
cargo surveyor Intertek Testing Services reported a 1.8 percent
fall in exports for the first ten days of August from a month
ago.
But prices pulled back on short-covering ahead of USDA's
monthly supply and demand report at 1230 GMT that is likely to
show a tighter soy output and squeeze soybean oil supply,
shifting some demand to palm oil.
"The USDA report tonight is the most important. If it is
bearish, we will see palm oil go down fast to 2,700 and 2,600
ringgit. If it is bullish, it will try to crawl above 3,000
ringgit," said a Malaysian planter.
"People will be watching Olympics but I will be watching the
USDA report."
At closing, the benchmark October palm oil futures
on the Bursa Malaysia Derivatives Exchange edged up 0.6 percent
to 2,882 ringgit ($925) per tonne. Prices touched a low of 2,844
ringgit, a level last seen on June 15.
Palm oil ended the week 1.2 percent lower, the fifth
consecutive week that the edible oil is in the red.
Total traded volumes were high at 28,005 lots of 25 tonnes
each on short-covering, compared to the usual 25,000 lots.
Malaysia palm oil stocks hit a five-month high of nearly 2
million tonnes, almost in line with market expectations,
industry regulator Malaysian Palm Oil Board said after the
midday break.
And the build up could continue as exports of the edible oil
remain sluggish with cargo surveyor Intertek Testing Services
reported Aug 1-10 exports at 357,372 tonnes, compared to 363,975
tonnes a month ago.
Another cargo surveyor Societe Generale de Surveillance
reported a 6.8 percent increase for the same period, but traders
said that could be due to a low base effect in July.
As festival demand has eased, traders are hoping that the
recently announced tax-free crude palm oil export quotas of 2
million tonnes could help bolster demand and help reduce stocks
in coming months.
Oilseeds supply could tighten in coming months as Indonesia,
the world's top palm oil producer, lowered its earlier output
forecast by 8 percent this year, an agriculture ministry
official said late on Thursday.
Oil fell below $113 a barrel on Friday as a slowdown in
China's trade flows and weaker forecasts from the International
Energy Agency added to concern about weakening fuel demand,
offsetting hopes of stimulus measures aimed at lifting global
growth.
In other vegetable markets, the most active U.S. soyoil
contract for December delivery had lost 0.2 percent and
the most active January 2013 soyoil contract on the
Dalian Commodity Exchange had gained 0.3 percent.

Palm and soy oil prices at 1011 GMT

Contract Month Last Change Low High Volume
MY PALM OIL AUG2 2750 -67.00 2750 2750 0
MY PALM OIL SEP2 2843 +16.00 2800 2843 1327
MY PALM OIL OCT2 2882 +17.00 2839 2885 15963
CHINA PALM OLEIN JAN3 7746 -72.00 7714 7884 320382
CHINA SOYOIL JAN3 9654 +2.00 9628 9758 480276
CBOT SOY OIL DEC2 53.10 -0.10 52.86 53.48 8870

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

($1=3.116 Malaysian ringgit)

(Editing by Niluksi Koswanage)