KUALA LUMPUR: Malaysian palm oil futures edged higher on Wednesday after two straight sessions of sharp losses, although gains were capped by demand concerns after top producer Indonesia lowered its export tax reference price.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange gained 19 ringgit, or 0.49%, to 3,860 ringgit ($866.44) a tonne.

Indonesia has lowered its crude palm oil reference price to $872.27 per tonne, effective Aug. 1-15, senior economic ministry official Musdhalifah Machmud said on Tuesday.

The price recovery was capped by selling pressure from Indonesia, Refinitiv Commodities Research said in a note.

Refinitiv cut its 2021/22 palm oil production forecasts for Indonesia and Malaysia to 46.7 million tonnes and 18 million tonnes, respectively, as record-high inventories and prolonged labour shortages disrupt harvesting operations in the world’s largest producers.

In top buyer India, the state of Telangana is targeting 2 million additional acres under oil palm cultivation in the next four years, aiming to reduce the nation’s vegetable oil imports.

India’s soyoil imports in July more than doubled from a month ago to a record high as refiners ramped up purchases to take advantage of New Delhi’s move to allow duty free imports of the vegetable oil to calm all-time high prices, five dealers said.

Soyoil prices on the Chicago Board of Trade were up 0.9%. Dalian’s most-active soyoil contract rose 1.6%, while its palm oil contract fell 2%.

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