KUALA LUMPUR, Feb 29: Malaysian palm oil surged above 4,000 ringgit a ton for the first time on Friday as crude oil’s surge to a record and buoyant export demand triggered a fresh wave of buying by funds and speculators.

The benchmark May contract on the Bursa Malaysia Derivatives Exchange rose as much as 151 ringgit, or 4.2 per cent, to 4,013 ringgit ($1,258), as traders fretted about a surge in demand from India and China following damage to their domestic crops.

The contract then settled up 155 ringgit at 4,005 ringgit.

It’s a new high and demand is just rising at an unrelenting pace because of palm oil’s discount to soyaoil, which has increased to about $170, said S. Paramalingam, managing director of Pelindung Bestari, a local commodities brokerage.

Palm oil’s rally is sustainable and it’s in part due to soyaoil’s losing acreage battle in the United States and overall fall in vegetable oil supplies after bad crop situation in Asia.” Other traded months rose between 146 and 155 ringgit. Overall volume stood at 11,787 lots of 25 tons each.

Palm oil, used in goods ranging from biscuits and lipstick to biofuels, has risen 31 percent this year on a heady cocktail of strong Asian demand, increased Indonesian export duties and tightness in global soy oil supplies.

This put more pressure on palm oil to satisfy food demand as shipments to Europe and other regions rise.

Palm oil exports from Malaysia have been robust, with cargo surveyor Intertek Testing Services and Societe Generale reporting up to a 10 per cent increase in February palm oil shipments from a month ago.

Oil hit a new high above $103 on Friday after Ecuador shut a key export pipeline and a fire hit a major European natural gas plant, and the US dollar’s decline to a succession of lows kept fresh funds flowing in.

In Malaysia’s physical market, crude palm oil for March shipment in the southern region was quoted at 3,970/3,980 ringgit a ton. Trades were done at 3,960 ringgit and 3,970 ringgit.—Reuters