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Vegoils: Palm oil slumps to two-year low tracking weaker soyoil

KUALA LUMPUR (Reuters) - Malaysian palm oil futures slumped as much as 3 percent on Tuesday evening to their lowest in two years, tracking weakness in related edible oils.

Indonesian worker Abdul Rahim Gani, 32, carries oil palm fruits at Felda Bukit Cerakah in district of Klang outside Kuala Lumpur April 16, 2014. REUTERS/Samsul Said/File Photo

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was down 1.9 percent at 2,263 ringgit ($565.47) per tonne at the close of trade, its sharpest daily drop since early March.

It earlier fell to its lowest since July 15, 2016 at 2,238 ringgit.

Trading volumes stood at 80,962 lots of 25 tonnes each at the end of the trading day.

“Palm market is down today tracking externals,” said a Kuala Lumpur-based futures trader, referring to soyoil on the Chicago Board of Trade and China’s Dalian Commodity Exchange.

The Chicago July soybean oil contract fell 2.3 percent, in line with soybeans, in response to the prospect of a deepening trade war between Washington and Beijing.

Palm oil prices track the performance of other edible oils, as they compete for a share in the global vegetable oils market.

In other related oils, the September soybean oil on China’s Dalian Commodity Exchange dropped 3.6 percent, while the Dalian September palm oil contract plunged 5 percent.

Chinese prices of commodities from iron ore to rubber tumbled on Tuesday, with investor sentiment shaken by an intensifying trade war between Beijing and Washington.

Market players may also be trading cautiously ahead of export data, said another trader, referring to June 1-20 shipment data from cargo surveyors.

Malaysian palm oil shipments in the first half of June declined 7.2 percent-9.6 percent from a month earlier, according to AmSpec Agri Malaysia and Societe Generale de Surveillance.

Palm oil still targets its June 13 low of 2,300 ringgit per tonne, said Wang Tao, a Reuters market analyst for commodities and energy technicals.

Reporting by Emily Chow; Editing by Subhranshu Sahu and Jane Merriman