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Vegoils: Palm oil edges down tracking weaker crude oil

KUALA LUMPUR (Reuters) - Malaysian palm oil futures marginally declined in early trade on Monday tracking weaker crude oil prices and were set for a second straight session of losses.

FILE PHOTO: A truck carrying oil palm fruits passes through Felda Sahabat plantation in Lahad Datu in Malaysia's state of Sabah on Borneo island, February 20, 2013. REUTERS/Bazuki Muhammad/File Photo

Palm oil is impacted by the movements of crude oil, as it is used to produce the bio components of biodiesel. Oil prices fell over 1 percent on Monday after the White House said the leader of Saudi Arabia promised President Donald Trump to raise oil production if needed. [O/R]

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was down 0.1 percent at 2,324 ringgit ($575.53) a tonne at the midday break.

Trading volumes stood at 8,624 lots of 25 tonnes each at noon.

While palm is down tracking crude oil movements, uncertainty remains over its longer-term outlook, said a Kuala Lumpur based-futures trader.

“U.S-China trade frictions has caused some pressure on palm. Exports are also poor,” she said, adding that a weaker ringgit however has been a supportive factor.

Palm was hovering near a two-year low over the last two weeks, but added 1.8 percent in the last week. [POI/]

Malaysian exports of the edible oil fell 10.3 percent on-month in June, according to independent inspection company AmSpec Agri Malaysia on Saturday.

A weaker ringgit supports palm as it makes the edible oil cheaper for holders of foreign currencies.

The ringgit, palm’s traded currency, is trading at its weakest level since the start of the year. The unit was flat at 4.0380 against the dollar at noon.

Palm oil may retrace to a support at 2,290 ringgit per tonne, said Reuters market analyst for commodities and energy technicals Wang Tao.

In other related oils, the Chicago December soybean oil contract fell 0.2 percent, while September soybean oil on China’s Dalian Commodity Exchange was down 0.1 percent.

Meanwhile, the Dalian September palm oil contract declined 0.1 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 Vyas Mohan