VEGOILS-Palm rises to over 2-wk high, posts biggest weekly gain since Feb

(Updates prices)

* Palm up 3.4 pct this week, eyes biggest weekly gain in 4 mths

* Malaysian ringgit retreats to 3.6640 per dollar

* Palm oil targets 2,246 ringgit - technicals

By Anuradha Raghu

KUALA LUMPUR, May 29 (Reuters) - Malaysian palm oil futures edged up to

their highest in over two weeks on Friday to record their biggest weekly gain in

four months, buoyed by a weak ringgit and firm overseas soy markets.

Benchmark prices hit three-week lows on Monday before reversing course to

follow a surge in Chinese and U.S. soy markets, with robust export demand and a

weakening Malaysian currency fuelling the rally. Prices have risen 3.8 percent

this week, the strongest weekly rise since early February.

The August contract on the Bursa Malaysia Derivatives exchange

rallied to 2,223 ringgit, its highest since May 13, before settling at 2,217

ringgit a tonne by Friday's close, 0.4 percent higher.

"The market is holding firm because we have a weak ringgit which is

encouraging exports, and good movement from U.S. and Dalian soybean oil," said a

trader with a foreign commodities brokerage in Kuala Lumpur.

"That's why the market can go up to retest the 2,220 ringgit resistance

level. If there's no follow through, there may be some profit-taking... but

given the momentum and velocity of the movement, chances are higher of the

market going up."

Prices in May rose 5.5 percent, posting their first monthly gain in three

months.

Total traded volume stood at 30,811 lots of 25 tonnes each, well below the

average 35,000 lots.

The Malaysian ringgit notched a fifth straight day of losses on

Friday, and was down 0.6 percent to 3.6640 per dollar by 1016 GMT.

Technicals were bullish. Palm oil is poised to break resistance at 2,222

ringgit per tonne and rise further to the next resistance at 2,246 ringgit,

according to Reuters market analyst Wang Tao.

Indonesia, the world's largest producer of palm oil, will keep its export

tax for the crude grade unchanged at zero percent for June, its trade ministry

said on Friday. Malaysia, the No.2 producer, will also continue its duty-free

policy for the next month.

The U.S. July soyoil contract had edged down 0.1 percent in late

Asian trade, while the most active September soybean oil contract on

the Dalian Commodity Exchange fell 0.4 percent.

In other markets, crude oil prices rose around 1 percent on Friday after

U.S. inventories fell for a fourth straight week, although prices were set for a

weekly drop on a stronger dollar.

Palm, soy and crude oil prices at 1017 GMT

Contract Month Last Change Low High Volume

MY PALM OIL JUN5 2165 -5.00 2160 2180 59

MY PALM OIL JUL5 2214 +5.00 2205 2222 2304

MY PALM OIL AUG5 2217 +9.00 2200 2223 15251

CHINA PALM OLEIN SEP5 5116 -12.00 5100 5162 885376

CHINA SOYOIL SEP5 5738 -22.00 5732 5776 466280

CBOT SOY OIL JUL5 32.04 +0.20 31.99 32.14 4807

INDIA PALM OIL MAY5 456.90 +0.20 456.50 457.00 192

INDIA SOYOIL JUN5 601.20 +3.10 596.50 602.00 17690

NYMEX CRUDE JUL5 58.46 +0.78 57.92 58.58 28868

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 = 3.6640 ringgit)

($1 = 6.1985 Chinese yuan)

($1 = 63.84 Indian rupees)

(Editing by Richard Pullin and Prateek Chatterjee)