KUALA LUMPUR: Malaysian palm oil futures closed lower on Friday but still logged its highest weekly gain in more than 16 months, as India pulled back from buying amid a widening premium over soft oils, with fund positions largely driving current prices.

The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange slid 70 ringgit, or 1.52%, to 4,533 ringgit a metric ton at the close.

The contract snapped a four-session winning streak on the day but still posted a weekly gain of 6.53%, the highest since mid-June 2023.

Palm is currently trading at a premium compared to other soft oils, which has led to a reduced buying interest from India since festive season purchases have concluded, a Mumbai-based trader with a global trade house said.

“Production is also flat in Malaysia and fund positions are currently dominating future crude palm oil prices. We will see some corrections in the market once short positions are squeezed out,” the trader said.

Cargo surveyors estimate exports of Malaysian palm oil products rose between 9.7% and 10.8% during Oct. 1-25, compared with the same period a month ago.

Dalian’s most-active soyoil contract rose 1.07%, while its palm oil contract climbed 1.09%.

Soyoil prices on the Chicago Board of Trade were down 0.9%. Palm oil tracks the price movements of rival edible oils, as they compete for a share in the global vegetable oils market.

Palm hits highest level in over two years due to weak output, policy moves by top producers

Oil prices nudged higher and are on track for a weekly gain of more than 1%, as tensions in the world’s top oil-producing region, the Middle East, and a restart in Gaza ceasefire talks in the coming days kept traders on edge. Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

The ringgit, palm’s currency of trade, strengthened 0.18% against the US dollar, making the commodity more expensive for buyers holding foreign currencies.