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* Indonesian prices may drop to stay competitive if levy imposed

* Palm oil to retest resistance at 2,253 ringgit -technicals

* Oil falls as Iran, China discuss more supply

* Malaysian March palm stocks at 1.75 mln T, first gain in 4 mths -Reuters poll

Malaysian palm oil futures fell on Tuesday, ending a three-day winning streak due to concerns over rising palm supplies and on anticipation of stiffer competition from top producer Indonesia.

Traders said Indonesia's plans to impose a levy on its exports of crude and processed palm oil could channel demand to Malaysia, which may in turn force Indonesian sellers to reduce their prices to remain attractive.

Indonesia accounts for about 52 percent of world output.

"Indonesia will soon lower their prices to compete and the market will need to adjust to that,"

said a trader with a local commodities brokerage in Malaysia.

The benchmark June contract on the Bursa Malaysia Derivatives exchange had inched down 1.1 percent to 2,208 ringgit ($608) a

tonne by Tuesday's close. Total traded volume stood at 40,373 lots of 25 tonnes, above the usual 35,000 lots.

Worries about a strong recovery in crude palm oil production in Malaysia added to the downward pressure on prices, which fell more than 6 percent in March, the worst showing since August 2014.

A Reuters survey of six planters, traders and analysts showed Malaysia's palm stocks likely rose to 1.75 milllion tonnes in March,

their first rise in four months, as higher output in the world's No.2 producer offset export demand.

On the technical front, palm oil may retest resistance at 2,253 ringgit per tonne as its rebound from the March 18 low of 2,128 ringgit has not been completed, according to Reuters market analyst Wang Tao.

On Monday palm had risen to the highest in more than three weeks, lifted by strength in crude, which notched overnight gains of nearly 6 percent.

But this support fizzled out on Tuesday. Brent crude oil fell towards $57 a barrel on signs of growing oversupply as Iranian officials visited Beijing to push for more oil sales after Tehran agreed on a framework nuclear deal that

could lead to the lifting of sanctions.

In other competing vegetable oil markets, the U.S. soyoil May contract fell 0.3 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodity Exchange rose 1.2 percent.

Palm, soy and crude oil prices at 1020 GMT

Contract Month Last Change Low High Volume

MY PALM OIL APR5 0 +0.00 0 0 0

MY PALM OIL MAY5 2214 -27.00 2209 2239 3052

MY PALM OIL JUN5 2208 -25.00 2202 2232 23108

CHINA PALM OLEIN SEP5 4746 +84.00 4702 4778 294052

CHINA SOYOIL SEP5 5448 +62.00 5420 5478 284570

CBOT SOY OIL MAY5 31.17 -2.90 31.16 31.45 6964

INDIA PALM OIL APR5 442.30 -2.90 441.60 445.80 700

INDIA SOYOIL APR5 607.15 +1.35 604.00 610.20 29365

NYMEX CRUDE MAY5 51.68 -0.46 51.27 51.99 32077

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 = 3.6345 Malaysian ringgit)

($1 = 6.1983 Chinese yuan)

($1 = 62.33 Indian rupee)