VEGOILS-Palm oil falls more than 1% after short-lived recovery

JAKARTA, Jan 23 (Reuters) - Malaysian palm oil futures fell 1.3% in early trading on Thursday, giving up some gains from a rally in prices in the previous session on subdued demand.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange eased to 2,935 ringgit after jumping 3% in the previous session.

"The market is adjusting after Wednesday's euphoric recovery," said Anilkumar Bagani, research head at Sunvin Group, a Mumbai-based vegetable oil broker.

The contract on Wednesday rose after an industry body forecast a bigger-than-expected drop in output and on hopes that India would reduce duties on imports of the vegetable oil.

The Malaysian Palm Oil Association (MPOA) forecast a drop of 17% in Jan. 1-20 palm oil production, compared with a 5% to 10% fall expected by the market.

The surge, however, was expected to be short-lived due to lower demand, traders told Reuters.

Prices were further weighed down by rumours that India may reduce import duties on other vegetable oils more than on palm, a Kuala Lumpur-based trader said.

Soyoil futures on the Dalian Commodity Exchange rose 0.5%, while palm oil futures contract traded 2.2% higher.

Soyoil on the Chicago Board of Trade last traded down 0.7%.

Palm oil is affected by price movements in related oils as its competes for a share of the global vegetable oil market.

FUNDAMENTALS

* Profit-taking pulled down Chicago Board of Trade wheat futures on Wednesday after robust global demand and concerns about tightening supplies pushed the most-active contract to its highest price since August 2018.

* Oil prices fell to their lowest in seven weeks on Thursday on concerns that the spread of a newly identified respiratory virus from China may lower fuel demand at the same time a report showed oil inventories in the United States rose last week.

MARKET NEWS

* Asian shares and U.S. stock futures edged lower on Thursday as investors remained anxious about the spread of a new flu-like virus in China just as millions prepared to travel for the Lunar New Year.

* Technology shares led the S&P 500 marginally higher on Wednesday, as a healthy forecast from IBM helped mitigate worries over the developing coronavirus outbreak.

* The safe-haven Japanese yen was firm and the Chinese yuan fragile on Thursday as traders kept a wary eye on the spread of a virus in China, while the ailing Australian dollar jumped after a surprise drop in unemployment.

DATA/EVENTS (GMT) 0030 Australia Employment, Unemployment Rate Dec 1245 EU ECB Refinancing, Deposit Rates Jan 1330 US Initial Jobless Claims Weekly 1500 EU Consumer Confid. Flash Jan 2350 Japan Bank of Japan releases minutes of monetary policy meeting (Reporting by Fathin Ungku; Editing by Anil D'Silva)