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Vegoils: Palm oil rises to two-week top on weaker ringgit, slowing output

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Reuters KUALA LUMPUR
By Emily Chow
KUALA LUMPUR (Reuters) - Malaysian palm oil futures hit a two-week high in early trade on Thursday, gaining on the back of a weaker ringgit and expectations of slowing output.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was up 0.4 percent at 2,323 ringgit ($575.57) a tonne at noon, in line for a second day of gains.
The contract touched a high of 2,327 ringgit, its strongest since June 14.
Trading volumes stood at 12,657 lots of 25 tonnes each at noon.
"The ringgit's continuous depreciation and concerns of drops in June palm production may provide good support and stoke buying activities," said a Kuala Lumpur based futures trader. A weaker ringgit usually makes palm oil cheaper for foreign buyers.
The ringgit, palm's currency of trade, was in line for a fourth straight day of losses. It fell to its lowest against the U.S. dollar since Jan. 2 on Thursday, and was last down 0.2 percent at 4.0360 per dollar.
Palm oil output in Indonesia and Malaysia could also decline in coming weeks due to disruptions in the fruit harvesting process.
Indonesian smallholder palm farmers have overwhelmed mills as they rush to sell fruit following a longer-than-usual break for the Eid public holidays, while Malaysian planters are struggling with a post-holiday labour shortage.
Another trader added that news of a proposal by the U.S. Environmental Protection Agency to set a higher biofuels blending mandate also lent some support to palm prices.
In other related oils, the Chicago July soybean oil contract slipped 0.2 percent, while September soybean oil on China's Dalian Commodity Exchange was up 0.4 percent.
Meanwhile, the Dalian September palm oil contract rose 1.1 percent.
Palm oil prices track the performance of other edible oils, as they compete for a share in the global vegetable oils market.
(Reporting by Emily Chow; editing by Richard Pullin)

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First Published: Jun 28 2018 | 10:47 AM IST

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