KUALA LUMPUR: Malaysian palm oil futures jumped 2% on Wednesday, ending a three-day losing streak, underpinned by expectations of tight supplies in November hit by heavy rains and as traders switched to long positions.

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange settled up 2.6%, at 3,364 ringgit ($823.50) a tonne.

Palm hit a one-week low in the previous session, after three straight sessions of losses.

“There is a lot of technical trading without much fundamentals,” a Kuala Lumpur-based trader said.

Malaysia’s Meteorology Department said heavy rains, storms and strong winds are expected to persist across the country until the end of December, state media Bernama reported. FGV Holdings Bhd, the world’s largest producer of crude palm oil, on Tuesday warned that its fourth-quarter output would be hit by uncertainties over the weather and Covid-19 curbs.

“However, Indonesia’s probable reduction in fuel demand, and palm oil’s very high premium over gas oil, which may result in the skipping or delaying of the B40 biodiesel mandate, is likely to affect palm oil’s uptrend,” Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.

Indonesia, the world’s no. 1 palm producer, said on Monday it is unlikely to proceed with plans to raise the bio-content of its palm oil-based biodiesel to 40% next year as it struggles to fund the programme.

Palm oil’s premium over gas oil is at its highest in a nearly decade, making the edible oil an unsustainable option for biodiesel feedstock.—Reuters