KUALA LUMPUR: Malaysian palm oil futures rose as much as 3% on Wednesday, closing at their highest in nearly two weeks on the back of strength in competing oils on the Dalian Commodity Exchange and the Chicago Board of Trade, and fears of a supply squeeze.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed up 87 ringgit, or 2.29%, to 3,892 ringgit ($944.89) a tonne, its highest since April 8.

It had earlier touched an intraday high of 3.8%.

Markets reacted to firmness in overnight soyaoil as global edible oil stocks are tight, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

An estimate by the Southern Peninsula Palm Oil Millers’ Association in Malaysia that production during April 1-20 will be unchanged from the month before, defeated market expectations of a rise in output, Paramalingam said.

“Exports in April are better and with the tightness in production, we are going to have a strain in stockpiles,” he said.

Shipments of Malaysian palm oil products during April 1-20 rose between 10% and 12.7% from a month earlier, according to cargo surveyor data, although the rise in exports was lower than market expectations.

“Palm oil prices will remain firm and there is a potential that the market will trade higher towards end of April to first two weeks of May,” Paramalingam said.

Dalian’s most-active soyaoil contract gained 2.9% and its palm oil contract rose 4.4%. Soyaoil prices on the Chicago Board of Trade were up 1.4%.

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

Global commodity prices are expected to stay firm around current levels in 2021 after recovering in the first quarter buoyed by strong economic growth, the World Bank said on Tuesday.