KUALA LUMPUR: Malaysian palm oil futures gained 2% on Wednesday as soyaoil prices strengthened, with improved exports and expectations of tighter supplies of Indonesian crude palm oil aiding sentiment.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange settled up 2.04%, at 2,406 ringgit ($563.33) a tonne, its higest closing in two weeks.

The contract had dropped 1.4% on Tuesday.

"A strong recovery in South American soyaoil prices has helped crude palm oil futures to open gap higher," said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.

Dalian's most-active soyaoil contract fell 0.14%, while its palm oil contract gained 0.16%. On the Chicago Board of Trade, soyaoil prices shed 0.27%.

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

"Hot and dry weather in Indonesia, better exports and tightness in the supply of Indonesian crude palm oil are also supporting prices," said Paramalingam Supramaniam, director of Selangor-based brokerage Pelindung Bestari Sdn Bhd.

Traders are also squaring off positions ahead of a supply and demand report by industry regulator the Malaysian Palm Oil Board to be released on Friday, he added.

European Union palm oil imports in the 2019/20 season ended June 30 fell 12% from the previous season to 5.71 million tonnes. Soyabean imports rose 1%.