* Palm oil to test support at 2,175 ringgit -technicals

* Malaysian March palm output seen rising first time since

August

 - Malaysian palm oil futures

inched down on Wednesday, retreating further from sharp gains

made earlier in the week as a firm ringgit and concerns over

rising palm supplies stifled buying interest.

Benchmark prices on Monday rose above a 3-week top of 2,250

ringgit, partly fuelled by anticipation Indonesia was close to

imposing levies on crude and processed palm oil exports, traders

say. The proposal will likely be approved this week, pending

President Joko Widodo's signature.

"People jumped the gun. Some took advantage to try and push

prices up," said one trader with a foreign commodities brokerage

in Kuala Lumpur. "These two days things cooled down a bit

because there's no follow-through."

A firm Malaysian currency, in which the palm

feedstock is priced, muted buying interest from overseas buyers.

The ringgit was trading at 3.6270 per dollar by 1005 GMT,

stronger than the 3.7211 on March 30.

"The strong ringgit also put a dampener on things, because a

week before the ringgit was much weaker," the trader added.

The benchmark June contract on the Bursa Malaysia

Derivatives dropped 1.8 percent to 2,168 ringgit ($598) a tonne

by Wednesday's close, settling at the lower end of the day's

trading range between 2,165-2,204 ringgit.

Total traded volume stood at 45,771 lots of 25 tonnes, more

than the usual 35,000 lots.

The contract was also weighed by expectations of a strong

recovery in Malaysia's crude palm oil production in March and

April, after bouts of droughts and monsoon flooding in 2014

stressed trees and hindered fresh fruit growth.

A Reuters poll forecast output in the No.2 grower to surge

18 percent in March from a month ago to 1.32 million tonnes -

its first rise since August.

The pick up in output is expected to overtake export sales,

and may lead to end-stocks increasing for the first time in four

months to 1.75 million tonnes, the poll showed.

In other markets, oil prices fell towards $58 a barrel on

Wednesday as industry data showed a larger-than-expected weekly

increase in U.S. stockpiles and as Saudi Arabia reported record

output in March.

In other vegetable oil markets, the U.S. soyoil May contract

fell 0.4 percent in late Asian trade, reversing earlier

gains, while the most active September soybean oil contract

on the Dalian Commodity Exchange lost 0.6 percent.

Palm, soy and crude oil prices at 1018 GMT

Contract Month Last Change Low High Volume

MY PALM OIL APR5 2160 -34.00 2160 2160 30

MY PALM OIL MAY5 2172 -40.00 2171 2204 2031

MY PALM OIL JUN5 2168 -39.00 2165 2204 26849

CHINA PALM OLEIN SEP5 4714 -24.00 4692 4730 303586

CHINA SOYOIL SEP5 5414 -30.00 5392 5446 364436

CBOT SOY OIL MAY5 30.90 -1.80 30.87 31.09 6966

INDIA PALM OIL APR5 440.00 -1.80 439.30 442.80 466

INDIA SOYOIL APR5 605.45 -0.45 604.50 609.40 8580

NYMEX CRUDE MAY5 52.82 -1.16 52.56 53.23 35363

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 = 3.6270 Malaysian ringgit)

($1 = 6.2032 Chinese yuan)

($1 = 62.27 Indian rupee)