KUALA LUMPUR, June 12: Malaysian crude palm oil futures shot up almost 5 per cent on Tuesday as strong buying after two straight days of sharp decline and concerns over tight supplies boosted the market.

The benchmark third-month August contract on the Bursa Malaysia Derivatives Exchange finished up 113 ringgit, or 4.9 pc at 2,433 Malaysian ringgit ($706) a ton.

Malaysia's crude palm oil output rose 6.71 pc to 1,201,255 tons in May from 1,125,726 tons in April, official crop agency Malaysian Palm Oil Board said. But May output fell 13.7 pc from a year ago.

Palm oil has lost nearly 12 per cent since it hit record highs of 2,764 ringgit last week on booming demand and a squeeze in supplies. Dealers said they were not able to confirm market rumours that Chinese buyers had defaulted on palm oil purchases.

Chinese edible oil business is now controlled by large corporates and the market has matured, so it is difficult have defaults, said an official with a regional company that sells to China.

Palm oil, used mainly as a cooking oil but also in products ranging from cookies to biodiesel, has risen 22 per cent since January. It surged 40 per cent last year due to demand from the food and biodiesel sectors.

Other traded months rose between 47 and 167 ringgit. Overall volume more than doubled to 26,376 lots of 25 tons each.

September palm oil on Singapore's Joint Asian Derivatives Exchange (JADE) rose $10.50 to $683.50 a ton.

Exports of Malaysian palm oil products for June 1 to 10 fell 27 per cent to 339,117 tons from 463,865 tons shipped between May 1 and 10, cargo surveyor Intertek Testing Services said on Monday.

In Malaysia's physical market, crude palm oil for June shipment in the southern region was quoted at 2,600/2,630 ringgit a ton. Trades were done between 2,550 and 2,600 ringgit.—Reuters