KUALA LUMPUR, Malaysia - Palm oil tumbled to the lowest in almost three months on expectation that output in Malaysia may grow this year and on speculation unrest in Libya and the Middle East may continue.

The May-delivery contract dropped as much as 5.1 percent to 3,336 ringgit ($1,087) a ton on the Malaysia Derivatives Exchange, the lowest since Nov 29, and was at 3,423 ringgit at 4:15 pm on Thursday.

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Output may be 17.6 million tons, compared with 17 million in 2010, Yusof Basiron, chief executive officer of the Malaysian Palm Oil Council, said on Wednesday.

"Higher production estimates will put pressure on the markets, while slower demand is also another factor," Veeresh Hiremath, associate chief analyst at Karvy Comtrade Ltd said from Hyderabad in India.

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