JAKARTA: Malaysian palm oil futures posted a second consecutive weekly gain, as the contract rose for a fourth straight session on Friday, driven by stronger soyoil prices amid supply concerns and short covering.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange rose 8.82% to 4,306 ringgit ($968.08)per tonne, the highest in more than three weeks on Friday.

“As crude palm oil is trading at huge discount to soybean oil, even when local CPO fundamentals are deemed negative, the huge spread brought buyers to the palm market,” a Kuala Lumpur-based trader said, adding that short covering also move the price.

Chicago soybeans ticked lower but the market is poised for its biggest weekly rise in more than a year as forecasts of hot and dry weather in the US Midwest raised concerns over supplies.

The palm oil contract lost 12.3% this month, as Indonesia scrapped its export levy for all palm oil products until Aug. 31 to boost export in an effort to ease high inventory, while Malaysian palm exports in July dropped.

Indonesia, the world’s biggest palm oil exporter, has been struggling with high inventories since the country imposed a three-week export ban through to May 23 to reduce domestic cooking oil prices.

The country has issued palm oil export permit for a combined 4.23 million tonnes as of July 28 through its so-called Domestic Market Obligation (DMO) scheme as well as its programme to accelerate exports, Indonesian trade ministry data showed.

On Friday, Dalian’s soyoil contract rose 1.91%, while its palm oil contract gained 3.35%. Soyoil prices on the Chicago Board of Trade increased 3.25%.

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