KUALA LUMPUR: Malaysian palm oil futures ended higher for a third straight day on Friday to log weekly gains on stronger rival oil prices and production concerns over the impact of El Nino.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 61 ringgit, or 1.75%, to 3,554 ringgit ($801.35) a tonne, its highest closing since May 15.

The contract has rose 2.1% for the week.

Prices have been underpinned by concerns over adverse weather conditions and as top buyers India and China, where palm oil inventories are low, look to make purchases at the current prices levels, said Sandeep Singh, director of The Farm Trade, a Kuala Lumpur-based consulting and trading firm.

Crude palm oil production in Malaysia, the world’s second-largest producer, could drop between 1 million and 3 million tonnes next year due to the El Nino weather pattern, the Malaysian Palm Oil Board (MPOB) said on Friday.

Palm oil ends at over three-week low on slow demand

Malaysia’s exports during May 1 to May 25 fell 0.7% from the same week in April, cargo surveyor Intertek Testing Services said on Friday. Another cargo surveyor, AmSpec Agri Malaysia, said exports rose 0.7%.

Dalian’s most-active soyoil contract rose 2.7%, while its palm oil contract gained 2.4%. Soyoil prices on the Chicago Board of Trade were up 1.5%.

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