SINGAPORE (Oct 21): Malaysian palm oil futures closed higher on Tuesday, recouping some of last session's losses with expectations of lower production of the tropical product and higher soybean prices underpinning the market.

Chicago soybean futures rose 0.5 percent to snap a two-session losing streak, supported by the slow pace of harvesting in the United Stated and as dryness delayed planting in Brazil.

Palm oil production in Malaysia and Indonesia is expected to decline in the months ahead as a result of dry weather earlier this year.

The benchmark January palm oil contract on the Bursa Malaysia Derivatives Exchange ended 0.2 percent higher at 2,136 Malaysian ringgit ($655) per tonne. Traded volume stood at 36,048 lots of 25 tonnes, slightly above the usual average of 35,000 lots.

Still, the gain in palm oil futures could be short-lived on expectations of record U.S. soybean production, which is likely to boost competition in the world edible oil market.

"A decline in production and duty free exports of crude palm oil are supportive factors for the market but when we look at the global picture it shows abundant supplies," said one Kuala Lumpur-based trader.

"We expect prices to trade in a tight range of 2,100 to 2,200 ringgit a tonne until the year-end."

Palm oil futures may end the year 2 percent above current levels due to lower output in Malaysia, the second-biggest producer, but abundant supplies of rival oilseeds mean prices will still close down about 19 percent for the year, a Reuters poll showed.

September exports of crude palm oil and its derivatives in Indonesia, the world's top producer, fell 1.7 percent to 1.7 million tonnes from the previous month due to declining demand from top consumers including China, India and European countries, an industry body said.

Cargo surveyor Intertek Testing Services reported that exports of Malaysian palm oil products for Oct. 1-20 fell 10.2 percent to 894,697 tonnes compared with the same period in September, recording a slight improvement from steeper losses earlier in the month.

Another cargo surveyor, Societe Generale de Surveillance said exports during the period fell 11.4 percent to 884,628 tonnes from 998,689 tonnes shipped during Sept. 1-20.

There was additional support for palm oil stemming from firm crude oil values. Brent rose to around $86 a barrel on news of robust Chinese oil demand, although gains were capped by oversupply and concerns over the health of the rest of the global economy.

China's Dalian soybean oil eased 0.4 percent, while U.S. soyoil added 0.1 percent.

Palm, soy and crude oil prices at 1040 GMT

Contract Month Last Change Low High Volume MY PALM OIL OCT4 2205 +27.00 2180 2211 975 MY PALM OIL NOV4 2203 +43.00 2170 2210 5870 MY PALM OIL DEC4 2198 +43.00 2164 2207 23605 CHINA PALM OLEIN JAN5 5250 +106.00 5164 5268 891632 CHINA SOYOIL JAN5 5970 +98.00 5930 5984 512468 CBOT SOY OIL DEC4 33.08 +6.00 32.76 33.18 7522 INDIA PALM OIL SEP4 471.50 +6.00 466.70 472.40 474 INDIA SOYOIL OCT4 617.60 +5.40 614.50 620.50 68315 NYMEX CRUDE NOV4 92.71 -0.09 92.51 92.99 16550

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 = 3.2610 Malaysian ringgit) ($1 = 6.1205 Chinese yuan) ($1 = 61.3225 Indian rupee)