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VEGOILS-Palm hits two-week low, falls most since March, on oversupply concerns

(Updates throughout)

JAKARTA, June 12 (Reuters) - Malaysian palm oil futures fell to their lowest

in two weeks on Friday and made their biggest weekly tumble in 12, as oversupply

concerns were compounded by signs that buyers could switch to competing oils as

the difference between prices has narrowed.

By Friday's close the August palm oil contract on the Bursa

Malaysia Derivatives exchange was down 0.7 percent at 2,277 ringgit ($605.91) a

tonne, recovering slightly from a low of 2,254 ringgit hit earlier in the

session, the benchmark's lowest level since June 1.

The contract declined 2.8 percent this week, its biggest weekly decline

since March 20.

"Prospects for some demand to be switched to soyoil has the market reluctant

to move higher," said a trader with a local commodities brokerage in Kuala

Lumpur. The trader noted that soyoil was now approaching a $70 premium to palm,

down from the normal gap of around $120.

"Until weather cuts production, supplies should remain burdensome unless

2015 output is significantly smaller than previous estimates."

Traded volume was heavy at 46,946 lots of 25 tonnes each, well above the

more usual 35,000 lots.

Indonesia, the world's top exporter of the edible oil, will begin imposing a

$50 per tonne levy on crude palm oil and $30 for processed palm products exports

from June 15, the country's chief economic minister said on Friday.

A rally that took palm prices to three-month highs earlier in June may run

out of steam as buying ahead of the Muslim festival of Ramadan fades and markets

brace for growing supply as the main harvest approaches, traders and analysts

said.

Data from regulator the Malaysian Palm Oil Board on Thursday showed palm oil

stocks last month swelled to their highest since November to stand at 2.24

million tonnes, overturning expectations that robust export demand would dent

inventories.

In other markets, oil prices slipped on Friday after the world's top crude

exporter Saudi Arabia said it was ready to raise output to new record highs,

potentially adding to a global supply glut.

In competing vegetable oil markets, the U.S. July soyoil contract

inched up 0.1 percent, snapping four days of declines, in late Asian trade but

was headed for its biggest weekly fall since May.

Meanwhile the most active September soybean oil contract on the

Dalian Commodity Exchange fell 1.56 percent after hitting its lowest level in

more than two weeks.

Palm, soy and crude oil prices at 1117 GMT

Contract Month Last Change Low High Volume

MY PALM OIL JUN5 2260 -21.00 2260 2260 1

MY PALM OIL JUL5 2263 -21.00 2234 2269 2142

MY PALM OIL AUG5 2277 -16.00 2254 2283 27808

CHINA PALM OLEIN JAN6 5132 -114.00 5130 5268 1029444

CHINA SOYOIL SEP5 5666 -90.00 5662 5756 412330

CBOT SOY OIL JUL5 33.33 +4.20 33.09 33.39 9430

INDIA PALM OIL JUN5 455.90 +4.20 449.60 457.30 1823

INDIA SOYOIL JUN5 609.50 +4.45 604.10 610.40 3930

NYMEX CRUDE JUL5 60.20 -0.57 59.84 60.63 32346

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 = 3.7580 ringgit)

($1 = 6.2081 Chinese yuan)

($1 = 64.0800 Indian rupees)

(Reporting by Fergus Jensen; Editing by Richard Pullin and Susan Thomas)