KUALA LUMPUR, Aug 22: Malaysian crude palm oil futures soared 3.8 per cent on Friday, scoring two-week highs as overnight gains in crude oil spurred investors to jump back into vegetable oil markets.

But traders warned that the palm oil market, which heads into a third straight day of gains, did not reflect domestic fundamentals of swelling stocks and still-weak overseas demand.

Prices of the vegetable oil are 11 per cent lower this year, hurt by news of defaults and deferrments from key buyers India, China and Pakistan.

The benchmark November contract on the Bursa Malaysia Derivatives Exchange rose as much as 100 ringgit to 2,753 ringgit ($824) per ton, a level unseen since Aug. 8.

Palm oil is the best performer today, partly because it had fallen harder over the past few weeks compared to other vegetable oils, said a trader with a local broker.

Fresh buying from importers is lifting palm oil. Other traded months on Bursa Malaysia Derivatives Exchange rose between 60 and 84 ringgit. Overall volume shot up to 16,669 lots of 25 tons each from usual 10,000 lots.

Oil eased towards $120 on Friday, a day after its biggest jump in three months as part of a wider commodities rally spurred by a slump in the US dollar, and mounting tension between the United States and Russia.

September soyaoil in the United States lost 0.7 per cent after rallying strongly in Asian trade but the most-active January 2009 soyaoil contract on China’s Dalian Commodity Exchange climbed 1.7 per cent.

Exports of Malaysian palm oil products for Aug. 1-20 rose as much as 8.4 per cent to 904,645 tons, cargo surveyors reported on Wednesday.

But stocks of the vegetable oil are expected to rise further in August and September as oil palms enter a peak production period.

In the physical market in Malaysia, crude palm oil for delivery in August and September was called at 2,720/2,730 ringgit a ton in southern region. Trades were done between 2,720 and 2,750 ringgit.—Reuters