* Market sees strongest gains in nearly a week
* Palm up on US soybean oil, biodiesel announcement -traders

 (Updates latest prices, quote)

27/07/2016 (Reuters) - Malaysian palm oil futures reversed losses in late trade on Tuesday, in response to a stronger performance by U.S. soybean oil, plus Malaysia's commitment to raise the minimum bio content in biodiesel, which will boost palm oil consumption.

Benchmark palm oil futures for October delivery on the Bursa Malaysia Derivatives Exchange rose 1.7 percent to 2,309 ringgit ($569) per tonne at the close of trade, its
strongest daily gain since July 20.

Traded volumes stood at 48,297 lots of 25 tonnes each, above the 2015 average of 44,600.

Improvement in U.S. soy was a likely reason, one futures trader from Kuala Lumpur said, while another trader said Malaysia's biodiesel plans could be another supportive factor.

Malaysia, the world's second largest palm producer after Indonesia, said on Tuesday it would still raise the minimum bio-content to 10 percent for the transport sector this year, but not in July as initially expected.

"B10 will still be implemented this year, and the market is retracing on an oversold condition," said the trader.

Malaysia had earlier said it would introduce its so-called B10 biodiesel mandate by July, a month later than earlier announced, and see its full implementation by August.

This new mandate will increase the bio content in biodiesel and use more palm oil for blending purposes, increasing demand and supporting local prices.

Palm is down 3.5 percent so far this month and looks set for its second monthly drop in a row as weaker performing vegetable oils weigh on market sentiment.

Last Thursday, October palm oil had climbed to a two-week top before turning back south under pressure from the weakness in Chinese palm and soy markets.

The January palm olein contract on the Dalian Commodity exchange fell 0.4 percent, while the January soybean oil contract declined 0.8 percent.

Palm oil shipments from Malaysia, the world's second-largest producer of the vegetable oil, rose about 15 percent during July 1-25 compared with a month earlier, according to cargo surveyor
data released on Monday.

In other related vegetable oils, the Chicago soybean oil contract for December rose 1.1 percent.

    Palm, soy and crude oil prices at 1036 GMT
 Contract          Month    Last  Change     Low   High   Volume
 MY PALM OIL       AUG6     2352  +30.00    2305   2358     1064
 MY PALM OIL       SEP6     2327  +35.00    2273   2341     5884
 MY PALM OIL       OCT6     2309  +39.00    2253   2325    21883
 CHINA PALM OLEIN  JAN7     4902  -20.00    4844   4918   545940
 CHINA SOYOIL      JAN7     6088  -48.00    6022   6112   557420
 CBOT SOY OIL      DEC6    30.29   +0.32   29.96  30.36     8416
 INDIA PALM OIL    JUL6   519.80   -2.50  513.60    522     1104
 INDIA SOYOIL      AUG6    629.1   +0.55   626.7  631.2    37780
 NYMEX CRUDE       SEP6    42.75   -0.38   42.59  43.39    84169

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 = 4.0580 ringgit)
($1 = 67.2800 Indian rupees)
($1 = 6.6732 Chinese yuan renminbi)