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VEGOILS-Palm rises to two-week top on weaker ringgit, slowing output

* Palm reaches 2-week high of 2,327 rgt/T

* U.S. EPA proposal for higher biofuels mandate also

supported

palm - Trader

By Emily Chow

KUALA LUMPUR, June 28 (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

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noon. (1FCPO-TOT)

"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.

Palm, soy and crude oil prices at 0446 GMT

Contract Month Last Change Low High Volume

MY PALM OIL JUL8 2305 +1.00 2305 2305 44

MY PALM OIL AUG8 2323 +9.00 2305 2326 1232

MY PALM OIL SEP8 2323 +8.00 2305 2327 4962

CHINA PALM OLEIN SEP8 4818 +50.00 4766 4822 150724

CHINA SOYOIL SEP8 5566 +22.00 5526 5582 192300

CBOT SOY OIL DEC8 29.62 -0.07 29.52 29.66 2044

INDIA PALM OIL JUN8 644.50 +0.60 643.90 644.9 61

INDIA SOYOIL JUL8 754.7 +0.55 754.2 755 560

NYMEX CRUDE AUG8 72.54 -0.22 72.25 72.68 24913

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 = 4.0360 ringgit)

($1 = 68.9425 Indian rupees)

($1 = 6.6140 Chinese yuan)

(Reporting by Emily Chow; editing by Richard Pullin)