KUALA LUMPUR: Malaysian palm oil futures climbed more than 7% to a record close on Wednesday, boosted by Malaysian Palm Oil Board data showing a bigger-than-expected drop in July stockpile and tightening production.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange settled 311 ringgit, or 7.4%, higher at 4,511 ringgit ($1,064.42) a tonne, marking its biggest daily gain since January 2009.

Earlier in the day, the contract climbed as much as 8.3% to an all-time high of 4,548 ringgit a tonne.

End-July palm oil stockpiles in Malaysia, the world's second-largest producer, fell 7.3% from a month earlier to 1.5 million tonnes, according to Malaysian Palm Oil Board (MPOB) data released during the midday break.

Malaysian palm oil gains on forecast of output drop

"The market was widely expecting (stockpile) numbers to be a tad below 1.6 million tonnes... it's a big surprise," said Paramalingam Supramaniam, director of Malaysian brokerage Pelindung Bestari.

Output fell 5.17% to 1.52 million tonnes despite plantations entering the peak production months, while exports slipped 0.75% to 1.41 million tonnes.

Palm prices were also supported by stockpiling activities in importing countries, such as key buyer China, as arriving shipments face quarantine measures due to COVID-19, Paramalingam said.

Exports of Malaysian palm oil products for Aug. 1-10 fell between 10% and 12.8% from the same period in July, cargo surveyors said.

With a labour shortage in Malaysia delaying harvests and rising COVID-19 cases, palm prices can remain defensive, Paramalingam said.

Palm oil slumps 4% to over one-week low as July exports decline

Dalian's most-active soyoil contract rose 3.5% and while its palm oil contract gained 5.1%. Soyoil prices on the Chicago Board of Trade were up 2.7%.

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