* Rushed buying out of Indonesia lifts palm futures - trader

* Levy could lower CPO prices in Indonesia, but could

translate to better biodiesel demand - analyst

KUALA LUMPUR, March 23 (Reuters) - Malaysian palm oil

futures rose on Monday as Indonesia's plan to impose levies on

crude palm exports triggered hasty buying from the top producer,

although traders say gains are "unsustainable" as the tropical

oil battles with dwindling global demand.

Indonesian officials are preparing new rules for a charge of

$50 on every tonne of crude palm oil (CPO) shipped at a zero

export tax rate, with the funds going to help pay for biodiesel

subsidies announced in recent weeks. The measure is pending

approval by President Joko Widodo who will return from his

overseas trips on March 30.

The key palm grower, which supplies around 52 percent of the

world's palm oil, has set its crude palm oil export tax for

March at zero, unchanged since October last year.

"This buying is because people want to avoid the $50 levy

before the bill is signed by Jokowi," said a trader with a

foreign commodities brokerage in Kuala Lumpur.

"Once the speculative buying is over, then it will be bad.

Who wants to pay so high when there know there's a lot of supply

in Indonesia? These are very short-term, unsustainable gains."

The benchmark June contract on the Bursa Malaysia

Derivatives had inched up 1.2 percent to 2,186 ringgit ($592) a

tonne by Monday's close, pausing a losing streak that had

dragged prices to their biggest weekly drop since November last

week.

Total traded volume stood at 40,932 lots of 25 tonnes,

higher than the average 35,000 lots.

Analysts say while the potential tax levy could lower CPO

prices in Indonesia and be negative for pure upstream palm oil

players in the short term, it could underpin prices if the

measure is successful in boosting biodiesel demand.

"This levy could be a medium-term positive for CPO players,

if it is successful in boosting biodiesel demand, resulting in

stronger CPO prices," said CIMB's Ivy Ng in a note on Monday.

In other markets, oil prices fell further on Monday, with

Brent dropping below $55 a barrel, after top exporter Saudi

Arabia said it would only consider cutting output if other

producers outside OPEC did so too.

The U.S. soyoil contract for May was up 0.8 percent

in late Asian trade, while the most active September soybean oil

contract on the Dalian Commodity Exchange rose 0.6

percent.

Palm, soy and crude oil prices at 1025 GMT

Contract Month Last Change Low High Volume

MY PALM OIL APR5 2190 +22.00 2173 2210 282

MY PALM OIL MAY5 2192 +25.00 2180 2212 5760

MY PALM OIL JUN5 2186 +26.00 2173 2208 22095

CHINA PALM OLEIN SEP5 4730 +16.00 4642 4744 714462

CHINA SOYOIL SEP5 5452 +30.00 5372 5464 570804

CBOT SOY OIL MAY5 30.91 +1.90 30.66 30.96 6861

INDIA PALM OIL MAR5 440.00 +1.90 439.30 442.80 382

INDIA SOYOIL APR5 583.60 +1.30 583.50 586.90 12365

NYMEX CRUDE MAY5 45.60 -0.97 45.33 46.44 31870

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 = 3.6945 Malaysian ringgit)

($1 = 6.2160 Chinese yuan)

($1 = 62.33 Indian rupee)