KUALA LUMPUR: Malaysian palm oil futures reversed early losses on Friday, setting the market on course for a third straight weekly gain underpinned by concerns over tight supply amid improving demand.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange gained 7 ringgit, or 0.17%, to 4,242 ringgit ($957.13) a tonne by the midday break, hovering near a seven-week high hit on Thursday.

The contract has gained 2.7% this week.

Palm oil prices hit 7-week high on stronger US soyoil

“Palm oil demand in India is picking up as the summer season approaches alongside improving demand in China, but global supply is tight due to restrictive export policies in top exporter Indonesia,” said Mitesh Saiya, trading manager at Mumbai-based trading firm Kantilal Laxmichand & Co.

Adding to supply concerns, Refinitiv Agriculture Research in a note said floods will impact western Indonesia and Malaysia palm oil regions, with Malaysia likely to face significant crop damage.

Malaysia will unveil its budget for 2023 later in the day.

Dalian’s most-active soyoil contract gained 0.5% while its palm oil contract rose 0.8%. Soyoil prices on the Chicago Board of Trade ticked up after declining 1.4% overnight.

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

Palm oil may rise into a range of 4,311-4,343 ringgit per tonne, as it has broken a resistance at 4,227 ringgit, Reuters technical analyst Wang Tao said.