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.

“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.

Dalian’s most-active soyaoil contract rose 3.5% and while its palm oil contract gained 5.1%. Soyaoil 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.