KUALA LUMPUR: Malaysian palm oil futures firmed on Monday, closing at their highest level in nearly three weeks as gains in global equities lifted market sentiment, but higher June production and bearish demand outlook capped gains.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange closed up 15 ringgit, or 0.62%, at 2,427 ringgit ($569.32) a tonne, after rising as much as 1.45%.

With palm oil futures reversing early losses, a Kuala Lumpur-based trader attributed the bounceback to some heavy buying for nearby months, and said there were concerns in the market that some states in key buyer India may reimpose lockdown measures to contain a spike in COVID-19 cases.

World shares were approaching a five-month peak and the dollar slipped as investors wagered the earnings season would see most companies beat forecasts given expectations had been lowered by coronavirus lockdowns.

Malaysian palm oil inventories at end-June fell 6.3% from a month earlier, while production jumped 14.2%, data released by the Malaysian Palm Oil Board on Friday showed.

"We project palm oil stocks to rise by 6% month-on-month to 2.01 million tonnes at end-July as we expect output to be flattish," Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.

"Exports are expected to fall by 10% month-on-month as we do not expect the high export base in June to be sustained."

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

Dalian's most-active soyoil contract gained 0.03%, while its palm oil contract rose 0.92%. Soyoil prices on the Chicago Board of Trade were down 0.8%.

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