VEGOILS-Palm oil drops 1.5 pct on expectation of higher Dec stocks

* Overnight falls in crude oil also weigh on palm oil

* Palm falls 2 pct in early trade after Monday's jump

By Emily Chow

KUALA LUMPUR, Dec 11 (Reuters) - Malaysian palm oil futures

fell 1.5 percent in first-half trade on Tuesday, erasing most of

the previous session's sharp gains, as overnight falls in crude

oil prices and expectations of higher inventories of the

vegetable oil in December weighed on the market.

The benchmark palm oil contract for February delivery

on the Bursa Malaysia Derivatives Exchange was down

1.5 percent at 2,012 ringgit ($483.19) a tonne at the midday

break, after declining as much as 2 percent to 2,002 ringgit

earlier in the session.

On Monday, palm oil rose 2.2 percent to its highest level

since Dec. 3 as official data showed falling output for the

first time in five months.

Trading volumes stood at 11,690 lots of 25 tonnes each at

the midday break on Tuesday. (1FCPO-TOT)

"Crude oil weakness is pressuring market, and there is

bearish sentiment over expectations that stockpiles are likely

to rise in December," said a Kuala Lumpur-based futures trader.

Data from the Malaysian Palm Oil Board on Monday showed that

inventory levels in November rose 10.5 percent from October to 3

million tonnes, while production in November slid 6.09 percent

from the previous month to 1.85 million tonnes. Exports fell

12.9 percent to 1.375 million tonnes.

Traders said declines in exports could continue to outpace

falls in production in December, leading to an increase in

stockpiles.

Meanwhile, crude oil fell nearly 3 percent on Monday over

concerns about growth in demand, erasing some of the gains made

last week on an OPEC-led decision to cut output.

Oil prices edged higher on Tuesday after Libya's National

Oil Company declared force majeure on exports from one of its

oilfields, but overall sentiment remained weak amid worries over

global stock markets and doubts that planned supply cuts led by

OPEC are enough to rein in oversupply.

Palm oil is impacted by movements in crude oil prices, as

the vegetable oil is used as feedstock to make biodiesel.

In other related oils, the Chicago January soybean oil

contract was down 0.5 percent, while the January soybean

oil contract on the Dalian Commodity Exchange fell 2.3

percent.

Meanwhile, the Dalian January palm oil contract

declined 1.7 percent.

Palm oil is impacted by movements of other edible oils, as

they compete for a share in the global vegetable oil market.

Palm, soy and crude oil prices at 0509 GMT:

Contract Month Last Change Low High Volume

MY PALM OIL DEC8 1890 +55.00 1884 1890 20

MY PALM OIL JAN9 1931 -27.00 1922 1940 152

MY PALM OIL FEB9 2012 -30.00 2002 2026 5994

CHINA PALM OLEIN JAN9 4076 -72.00 4068 4172 81284

CHINA SOYOIL JAN9 5086 -122.00 5080 5194 145954

CBOT SOY OIL JAN9 28.5 -0.02 28.5 28.5 2

INDIA PALM OIL DEC8 498.50 -4.50 497.40 503 165

INDIA SOYOIL DEC8 743.35 -1.65 742.6 743.4 430

NYMEX CRUDE JAN9 51.14 +0.14 50.89 51.31 30996

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 = 4.1640 ringgit)

($1 = 70.8500 Indian rupees)

($1 = 6.8733 Chinese yuan)

(Reporting by Emily Chow; Editing by Subhranshu Sahu)