KUALA LUMPUR: Malaysian palm oil futures closed higher on Friday, snapping two weekly losses, as stockpiles in June fell, although gains were capped on lower exports for July 1-10.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange closed up 0.36%, to 2,412 ringgit ($566.14) a tonne. For the week, the contract rose 2.3%.

Malaysian palm oil inventories fell 6.3% at end-June from a month earlier, according to the Malaysian Palm Oil Board, while a Reuters poll had pegged the decline at 5%.

"Production was surprisingly higher than market expectations of 7% to 12% increase," said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.

But exports during July 1-10 fell between 16.8% and 17.8% from the previous month, according to cargo surveyors.

Exports are expected to be sluggish in the near term due to the effects of COVID-19, but long-term prospects are upbeat as Malaysia improved ties with major importer India and exempted the edible oil from export duty, said Azila Abdul Aziz, chief executive officer of Kenanga Futures.

Oil prices dipped on worries of renewed lockdowns following a surge in coronavirus cases in the United States, making palm less attractive as biodiesel feedstock.

Dalian's most-active soyoil contract fell 0.79%, while its palm oil contract was down 2.56%. Soyoil prices on the Chicago Board of Trade were also trading down 0.03%.

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