October 20, 2007	Saturday	Shawwal 7, 1428

KUALA LUMPUR, Oct 19: Malaysian crude palm oil futures surged to a record high on Friday, driven by strong overnight gains in rival soybean oil and crude oil markets, traders said.

The benchmark January contract rose as much as 60 ringgit, or 2.2 percent, to 2,795 ringgit ($832), before some profit-taking eased the market to settle at 2,765 ringgit.

We are living in an era where the palm oil market has forgotten about its own domestic fundamentals and is more influenced by soyabean oil and crude oil, a leading trader said.

Other traded months rose between 35 and 47 ringgit. Overall volume stood at 10,651 lots of 25 tons each.

Dealers pegged resistance levels at 2,800 ringgit while support was seen at 2,750 ringgit.

The climb of nearly 8 per cent since last week has split the market, with some players saying export demand will dry up while others say palm oil remains at a discount even at high prices.

Palm prices are red hot and they are going to burn some buyers, said a dealer with a foreign brokerage. If palm oil continues in this way, soyabean oil is going to be much cheaper.

Fears of declining exports have been growing as buyers have locked in supplies for Asia festivals which began in September.

The market is waiting for export estimates for the first 20 days of October, due to be unveiled over the weekend by cargo surveyor Intertek Testing Services.

But let’s not forget that soyabean oil and other vegetable oils have also been rising at a pretty fast rate, so there will always be demand for palm oil, said a plantation official.

Palm oil, used in products ranging from confectionaries and cosmetics to biofuel, has nearly doubled since January 2006 while soyabean oil has risen close to 90 per cent.Soyabean futures at the Chicago Board of Trade rose to a near three-week high on Thursday on a weaker dollar and spillover buying from crude oil and soyabean oil.

December soyaoil ended 0.84 cent up at 40.99 cents per lb, after notching a new high of 41.14 cents -- the highest price for a spot contract since May 1984, when it hit 41.15 cents.

In Asian trade on Friday, the contract fell 0.09 cent to 40.90 cents per pound.

Oil climbed back towards its new $90 peak on Friday, supported by tight fuel stocks ahead of winter and a softening dollar.

US crude gained 33 cents to $89.80 a barrel. It hit an all-time high of $90.02 in early trade on Friday.

In Malaysia’s physical market, crude palm oil for October shipment in the southern region was quoted at 2,880/2,890 ringgit a ton. Trades were done at 2,990 ringgit.—Reuters