Updates with midday prices, analyst's comments

KUALA LUMPUR, Sept 20 (Reuters) -Malaysian palm oil futures rose for a third straight session on Friday and the market was set for a weekly gain, buoyed by strength in rival edible oils, though weaker crude oil prices, a firmer ringgit and demand concerns capped the rise.

The benchmark palm oil contract FCPOc3 for December delivery on the Bursa Malaysia Derivatives Exchange gained 42 ringgit, or 1.08%, to 3,918 ringgit ($937.32) a metric ton by the midday break.

The contract has gained about 2.7% this week.

The recent strength in Malaysian palm oil futures means they have traded at a premium against other oils such as Northwest Europe sunflower oil and U.S. soybean oil, Maybank Research analyst Ong Chee Ting said in a note.

"However, the current high crude palm oil price is unsustainable as a wider discount against other major oils is needed to sustain demand, especially if the industry's peak output has been pushed back to Q4."

Dalian's most-active soyoil contract DBYcv1 rose 0.46%, while its palm oil contract DCPcv1 added 1.24%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.05%.

Palm oil tracks price movements of rival edible oils, as they compete for a share of the global vegetable oils market.

Oil prices, which were little changed in early Asian trade, were on track to end higher for a second straight week, following a large cut in U.S. interest rates and declining global stockpiles. O/R

Brent futures LCOc1 were trading 0.36% lower at $74.61 a barrel at 0530 GMT. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

The ringgit MYR=, palm's currency of trade, strengthened 0.59% against the dollar, making the commodity more expensive for buyers holding foreign currencies and capping its gains.

Indonesia, the world's biggest palm oil exporter, will introduce a new set of monthly levies in a bid to improve competitiveness against rival edible oils, a regulation published on Thursday by its finance ministry showed.

Indonesia's palm oil exports are expected to decline this year due to increased domestic consumption because of a higher biodiesel blending mandate and a slight decrease in production, an industry official told Reuters on Thursday.

Palm oil may fall into a range of 3,817 ringgit to 3,853 ringgit per ton, following its failure to break resistance at 3,962 ringgit and a falling trendline, Reuters technical analyst Wang Tao said. TECH/C

($1 = 4.1800 ringgit)

Reporting by Danial Azhar and Ashley Tang; Editing by Mrigank Dhaniwala and Rashmi Aich

For a table on Malaysian physical palm oil prices, including refined oil, Reuters Terminal users can double click on or type OILS/MY01. * To view freight rates from Peninsula Malaysia/Sumatra to China, India, Pakistan and Rotterdam, please key in OILS/ASIA2 and press enter, or double click between the brackets. * Reuters Terminal users can see cash and futures edible oil prices by double clicking on the codes in the brackets: To go to the next page in the same chain, hit F12. To go back, hit F11. Vegetable oils OILS/ASIA1 Malaysian palm oil exports SGSPALM1 CBOT soyoil futures 0#BO: CBOT soybean futures 0#S: Indian solvent SOLVENT01 Dalian Commodity Exchange DC/MENU Dalian soyoil futures 0#DBY: Dalian refined palm oil futures 0#DCP: Zhengzhou rapeseed oil 0#COI: European edible oil prices/trades OILS/E