KUALA LUMPUR: Malaysian palm oil futures climbed 1% to a four-week closing high on Tuesday, as worsening floods stoked worries about a larger-than-expected slump in production.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange ended up 51 ringgit, or 1.05%, at 4,908 ringgit ($1,173.04) a tonne, rising for a third straight day.

The contract jumped 3.4% on Monday after seven states in Malaysia were hit by floods and thousands of people were evacuated, leading to disruption in harvesting activities.

The market is expecting a huge loss in production as the collection of palm fruit bunches has been severely hit, potentially reducing January output and December-end inventories, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.

Supplies remained tight due to wet weather brought by the Northeast monsoon season, with industry data estimating December output 8.5% lower than a month earlier, according to Refinitiv Commodities Research.

Persistently high palm oil prices and fresh lockdowns to combat the Omicron coronavirus variant have hurt demand, Refinitiv said on Monday.

Palm exports from Malaysia, the world’s second-largest producer, fell 6.9% month-on-month in December, cargo surveyor Societe Generale de Surveillance said.

Dalian’s most-active soyoil contract gained 0.8%, while its palm oil contract rose 2.5%. Soyoil prices on the Chicago Board of Trade advanced 1.1%.

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