December 28, 2007	Friday	Zilhaj 17, 1428

KUALA LUMPUR, Dec 27: Malaysian crude palm oil futures jumped more than 2 per cent on Thursday to a new high on a combination of concerns over global supplies from South America and surging demand from Asia.

But the market lost some of the gains in the evening session as players booked profits.

Traders said dry weather in Argentina was beginning to threaten soybean output after monsoon floods had battered palm plantations in Malaysia.

Global factors are at play, soyaoil is very strong and crude is also gaining, said a trader with a foreign brokerage.

On top of that, there is a shortage of crude palm oil in the physical market as supplies have still not normalised from flood affected areas.

The benchmark March contract on the Bursa Malaysia Derivatives Exchange finished up 17 ringgit at 3,097 ringgit ($929) per ton after hitting a high of 3,150 ringgit.

Palm oil prices have risen more than 55 per cent so far this year, while soy oil prices have surged close to 68 per cent.

Shares of Malaysian palm plantation firms, which have hit new highs on bullish prices, extended gains on Thursday.

Planters such as Sime Darby, IOI Corp, KL Kepong and Asiatic Development rose in an otherwise lacklustre market. The stock market’s plantation index has gained nearly 85 per cent this year.

Traders said demand for palm oil, used in products ranging from cosmetics and confectionaries to biodiesel, could rise further in China by the summer.

The price rise has had no impact at all, said one palm oil trader in Beijing referring to the Chinese demand at record high palm oil prices.

Supplies of crude palm oil in the physical market were tight as trucks could not enter some of Malaysia’s flooded estates.

They are still not able to get fruits out is some areas and the quality is also very poor, said a trader from the southern Johor state.

In the cash market, crude palm oil for January shipments in the southern region was quoted at 3,100/3,120 ringgit a ton.

There were no trades reported in the evening session.

Strength in the crude market also lent support. Oil rose 2 per cent on Wednesday ahead of a US government report expected to show crude inventories in the world’s top consumer fell for a sixth straight week.

US crude settled up $1.84 at $95.97 a barrel after climbing as high as $96.54, its highest since late November.

Vegetable oils, such as palm and soyabean oil, often track crude oil prices because of growing use of edible oils in the making of biofuels, which compete with petroleum. Chicago Board of Trade soybean futures rose to a 34-year high on Wednesday, boosted by record-high prices in China’s Dalian and Malaysian vegetable oil markets.

January soyaoil settled 1.60 cents higher at 49.06 cents per lb after rising to 49.16 cents, below the record high of 51.00 cents set in October 1974.—Reuters