VEGOILS-Palm rises to 3-week high as output worries ease

* Prices climb to 2,353 rgt in late trade, highest since

Sept. 17

* Palm oil may keep on rising to 2,401 ringgit - technicals

* "Huge crops" might not materialize yet - trader

* Malaysian end-stocks seen at 1.91 mln T - Reuters survey

By Anuradha Raghu

KUALA LUMPUR, Oct 8 (Reuters) - Malaysian palm oil futures

rose to their highest in nearly three weeks on Tuesday, posting

three straight days of gains, after a market survey showed palm

stocks and output in the world's No.2 producer may be lower than

investors had initially feared.

A Reuters survey on Monday showed that Malaysian palm oil

inventories may have climbed to a six-month high of 1.91 million

tonnes at the end of September, lifted by a 15 percent surge in

production.

Market players are wary that seasonally stronger output and

quicker harvesting in September would trump export demand and

lead to stockpiles that could quickly grow to record highs

again.

"The market had been talking about huge crops, but maybe it

might not materialize in September," said a trader with a

foreign commodities brokerage.

By Tuesday's close, the benchmark December contract

on the Bursa Malaysia Derivatives Exchange had inched up 1.4

percent to 2,351 ringgit ($735) per tonne. Prices had climbed to

2,353 ringgit, the highest since Sept. 17.

Trade was also more lively as Chinese markets, including the

Dalian Commodities Exchange, resumed trading after a week-long

national holiday, traders said.

Total traded volume stood at 31,954 lots of 25 tonnes each,

compared with the average 35,000 lots.

Technicals showed Malaysian palm oil had climbed above the

Oct. 2 high of 2,334 ringgit, and may keep on rising towards

2,401 ringgit, Reuters market analyst Wang Tao

said.

In competing markets, the U.S. soybean market registered

modest gains in the past few sessions, finding support after

private analytics firm Informa Economics lowered its estimate

for U.S. production of the oilseed.

Tighter supply of soybeans for crushing into soyoil could

shift demand to palm oil, a rival vegetable oil.

The U.S. soyoil contract for December rose 0.7

percent in late Asian trade. The most-active January soybean oil

contract on the Dalian Commodities Exchange rose 0.4

percent.

In other markets, Brent crude oil held above $109 a barrel

on Tuesday as the oil supply outlook improved and the U.S.

budget crisis continued to cloud the outlook for demand in the

world's biggest oil consumer.

Palm, soy and crude oil prices at 1006 GMT

Contract Month Last Change Low High Volume

MY PALM OIL OCT3 2350 +0.00 2346 2364 238

MY PALM OIL NOV3 2353 +31.00 2334 2353 3969

MY PALM OIL DEC3 2351 +33.00 2332 2353 15639

CHINA PALM OLEIN JAN4 5500 +108.00 5380 5556 444452

CHINA SOYOIL JAN4 7000 +30.00 6918 7044 518356

CBOT SOY OIL DEC3 40.17 +0.27 39.91 40.48 10707

NYMEX CRUDE NOV3 103.82 +0.79 102.85 103.84 13581

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=3.199 Malaysian ringgit)

(Editing by Clarence Fernandez)