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Oil Report

REFILE-VEGOILS-Palm falls over 2% on weaker global shares, Dalian prices

(Corrects day in lede graf to Tuesday)

* Palm oil falls for second straight day

* Lockdown worries in Europe drag global markets

* Malaysian exports likely steady until next month -analyst

KUALA LUMPUR, Sept 22 (Reuters) - Malaysian palm oil futures dropped more than 2% on Tuesday, dragged lower by weak Dalian prices and global equities, as fears over new coronavirus restrictions in Europe hit sentiment.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange slid 65 ringgit, or 2.16%, to 2,942 ringgit ($711.66) a tonne by the midday break. It had snapped a four-session rally to fall 2.4% on Monday.

“Prices came down on global weakness in equity markets and possible lockdown in some European states,” a Kuala Lumpur-based trader said. “Expect further weakness if global rout continues.”

Long liquidation is heavy as prices jumped by 200-250 ringgit ($48.38) in the last two weeks, the trader said.

Asian shares extended losses to a second day, as new pandemic measures in the UK and some other European countries spurred fears about fresh lockdowns that could threaten a nascent economic recovery and further pressure equity markets.

However, hopes of strong demand ahead of key festivals in China and India capped palm oil’s losses.

Shipments from Malaysia, which jumped this month, are expected to be steady until October, with arrivals to top buyer India expected to improve ahead of the Diwali festival there, according to Refinitiv Commodities Research.

Palm oil imports into the European Union and Britain in the 2020/21 season that started on July 1 totalled 1.41 million tonnes by Sept. 20, up from 1.32 million tonnes in the previous season, official EU data showed on Monday.

Dalian’s most-active soyoil contract fell 1.62%, while its palm oil contract dropped 2.42%. Soyoil prices on the Chicago Board of Trade gained 0.06%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

($1 = 4.1340 ringgit)

Reporting by Mei Mei Chu; Editing by Devika Syamnath

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