VEGOILS-Palm Oil Rises to Two-month High as Supply Tightens

* Palm climbs to 2,490 rgt/T, highest since June 15

* Tight supplies due to lower output, better demand supports market -trader

(Updates prices)

10/08/2016 (Reuters) - Malaysian palm oil futures rose to their highest in two months on tight physical supplies of the tropical oil and as competing vegetable oils on China's Dalian Commodity Exchange also gained.

Benchmark palm oil futures for October delivery on the Bursa Malaysia Derivatives Exchange were up 1.1 percent at 2,466 ringgit ($612) per tonne on Tuesday evening.

Palm earlier hit an intraday high of 2,490 ringgit, its highest since June 15, and charted a seventh winning session out of the past eight.

Traded volumes stood at 40,029 lots of 25 tonnes each at the end of the trading day, below the 2015 average of 44,600.

"There's some nearby tightness in the market," said a futures trader in Kuala Lumpur, attributing it to better demand.

"There's slower growth in production also."

A Reuters poll forecast Malaysia's palm oil output for July to grow 3.8 percent month-on-month to 1.59 million tonnes, it's strongest production levels since November but the weakest level for July since 2010. (MYPOMP-CPOTT)

Palm oil seasonally sees output rise during the second and third quarters of the year. However, dry weather caused by the

El Nino weather phenomenon earlier this year has limited palm fruit yields and lowered output across Indonesia and Malaysia.

The weather event brings scorching heat across Southeast Asia, damaging crops and lowering yield.

The poll had also forecast Malaysia's shipments to rise 13.9 percent from June to 1.29 million tonnes, in line with export data from cargo surveyors.

Societe Generale de Surveillance reported a 15.4 percent rise for the full month of July, while Intertek Testing Services showed a 12.7 percent gain in exports.

Official government data from the Malaysia Palm Oil Board is scheduled for release on Wednesday, after 0430 GMT.

Palm was also supported by stronger rival oils on the Dalian Commodity Exchange. It's January soybean oil contract was up 1.5 percent, while the January contract for refined, bleached and deodorized palm olein surged 2.5 percent.

In other related vegetable oils, the Chicago Board of Trade soybean oil contract for December was up 0.2 percent.

Palm, soy and crude oil prices at 1044 GMT

Contract Month Last Change Low High Volume

MY PALM OIL AUG6 2561 +11.00 2550 2620 140

MY PALM OIL SEP6 2498 +37.00 2468 2519 2571

MY PALM OIL OCT6 2465 +27.00 2443 2490 18332

CHINA PALM OLEIN JAN7 5314 +130.00 5208 5326 893980

CHINA SOYOIL JAN7 6254 +92.00 6176 6272 558164

CBOT SOY OIL DEC6 31.49 +0.08 31.39 31.66 5211

INDIA PALM OIL AUG6 535.00 +4.80 530.70 539.6 1909

INDIA SOYOIL AUG6 635.05 -0.30 634.8 638.9 19840

NYMEX CRUDE SEP6 43.24 +0.22 42.50 43.25 65085

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 = 4.0280 ringgit)
($1 = 66.8750 Indian rupees)
($1 = 6.6590 Chinese yuan)