KUALA LUMPUR: Malaysian palm oil futures extended early gains on Tuesday to hit their highest closing level in two weeks, lifted by stronger crude and soyoil prices.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 73 ringgit, or 2.18%, to 3,422 ringgit ($741.66) a metric ton, its highest close since May 30.

Brent crude futures and U.S. West Texas Intermediate (WTI) crude both rose about $1, making palm a more attractive option for biodiesel feedstock.

In related oils, Dalian’s most-active soyoil contract fell 0.1%, while its palm oil contract eased 0.5%. Soyoil prices on the Chicago Board of Trade were up 1.9%.

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

Palm oil falls on higher May supply, dip in early June exports

“The U.S.-Europe arbitrage opportunity offered on the cross-border trade by the bean oil basis versus the U.S. biofuels domestic requirements is supporting the widening of the price spread between soybean oil and palm olein,” said Marcello Cultrera, director at Singapore-based commodities consultancy Apricus 8 Pte Ltd.

This is improving palm oil’s relative value to edible oils, he added.

However, larger-than-expected May inventories weighed on sentiment.

Malaysia’s end-May palm oil inventories rose for the first time in four months, after output surged to its highest level so far this year, data from the Malaysian Palm Oil Board (MPOB) showed on Monday.

Stockpiles in the world’s second-largest producer rose 12.63% from the month before to 1.69 million metric tons.