KUALA LUMPUR, July 3: Malaysian crude palm oil futures climbed higher on Thursday as more traders bet on the vegetable oil’s attractiveness as a feedstock for biodiesel following another surge in crude oil prices to record levels But sharp falls in soyoil futures at China’s Dalian

Commodity Exchange after a large trading firm liquidated contracts weighed on palm oil prices, currently 19 percent off a record high of 4,486 ringgit per tonne hit in March.

The benchmark September contract on the Bursa Malaysia Derivatives Exchange settled up 19 ringgit at 3,635 ringgit ($1,113) after trading lower earlier on.

Palm oil got a helping hand from record crude oil and with expectations of better demand in the coming weeks, there might be a reversal of fortunes for the market...since it has been rather weak, said a trader with a local commodities broker.

Other traded months rose between 19 and 43 ringgit on the Malaysian exchange. Overall trade dropped to 8,439 lots of 25 tons each from the usual 10,000 lots.

The most-active January 2009 soyoil contract on China’s Dalian Exchange dived 4.3 per cent.

Large grain firm was selling and reducing its positions by 10,000 lots (in one of the contracts). Physical prices remained unchanged, said a trader in China.

Traders in Malaysia and Indonesia expect overseas demand from China, India and the Middle Eastern countries to pick up in July, as buyers stock up before the Asian festival season that begins in late August or early September.

Malaysia’s end-June palm oil stocks will touch 2.1 million tons from 1.9 million at end-May because of slowing demand in the last few months, traders said.

Oil jumped to record highs above $145 a barrel on Thursday as traders rushed to buy ahead of the long holiday weekend in the world’s top consumer to mark US Independence Day.

In Malaysia’s physical market, crude palm oil for July shipment in the southern region was quoted at 3,610/3,620 ringgit a tonne. Trades were done between 3,590 and 3,620 ringgit.—Reuters