On Wednesday, Malaysian futures for palm oil rose by 1%, compensating for losses due to sustained demand and the market digesting lower-than-expected end-of-June inventories.

The benchmark contract for palm oil with delivery in September on the Bursa Malaysia Derivatives Exchange increased by 39 ringgits, or 1%, to 3928 ringgits ($845.09) per metric ton.

According to Anilkumar Bagani, head of research at Mumbai-based vegetable oils broker Sunvin Group, the market is still taking cues from the Malaysian Palm Oil Board’s (MPOB) report, but sustaining the growth would require demand for fresh supplies, Reuters reported.

End-of-June inventories rose by 1.9% to 1.72 million metric tons compared to the previous month, but the increase was much lower than anticipated, as reported by the MPOB on Monday.

Exports from Malaysia during the period from July 1 to 10 increased by 18.7-26.1%, according to surveyor companies Amspec Agri and Intertek Testing Services, driven by higher demand from the major consumer, China.

Demand is expected to remain strong in the third and fourth quarters of the year, said Marcello Cultrera, director at Singapore-based commodity consultancy Apricus 8 Pte Ltd, Reuters reported.

The most active Dalian contract for soybean oil fell by 0.4%, while the palm oil contract dropped by 0.9%. Soybean oil prices on the Chicago Board of Trade rose by 1.8%.

Palm oil prices are influenced by fluctuations in prices of related oils as they compete for market share in the global vegetable oils market.

(1 dollar = 4.6480 ringgits)