KUALA LUMPUR: Malaysian palm oil futures rose on Thursday, hovering near record highs, on expectations that buyers would turn to the tropical oil to compensate for limited Black Sea sunflower oil following supply disruptions due to the Russia-Ukraine crisis.

Export backlog in Indonesia due to the domestic market obligation requiring cooking oil producers to sell 20% of their products locally also underpinned prices.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange closed up 125 ringgit, or 1.88%, to 6,785 ringgit ($1,621.46) a tonne, up for a third session in four.

The contract had earlier jumped as much as 5.7%.

Top buyer India has asked Indonesia to increase palm oil shipments to the country and temporarily lower its biodiesel blending rules, to compensate for a loss of sunflower oil supplies from the Black Sea region.

Ukraine has suffered damage to its ports and other export facilities, while Western sanctions have hit Russian supplies, raising concerns over long-term supply disruptions.

“Even if the war stops, sanctions on Russia may not be lifted immediately. It would take some time for the ports to reopen and the next sunflower planting may not be up to the usual pace,” UOB Kay Hian said in a note.

“There is also market talk that the Indonesian government may relook into lowering the percentage of domestic sales from the current 20% once the cooking oil shortage in Indonesia eases.”

Palm oil imports by world’s biggest buyers India and China are expected to be flat this year as red-hot prices deter demand, industry officials said.

India’s sunflower oil imports plunged 54% in February from the prior month as shipments from the Black Sea region were hit, while palm oil imports fell 15% because of higher prices, four dealers told Reuters.

Meanwhile, soyoil prices on the Chicago Board of Trade rose 1%. Dalian’s most-active soyoil contract were up 0.8%, while its palm oil contract 2.7%.