KUALA LUMPUR, Sept 18: Malaysian crude palm oil futures surged 7.1 per cent on Thursday after nearly breaking a key resistance level, once cash and futures trade picked up on strength in crude oil markets, traders said.

The strong gains snapped three straight days of declines, which were earlier prompted by a flight of funds from risky assets and news of defaults and deferments from top Asian counsumers.

Malaysian palm oil prices are trading at more than half their record levels due to bumper harvests, slowing global demand, weaker oil markets.

The benchmark December contract settled up as much as 145 ringgit to 2,185 ringgit ($631) after swinging from a low of 2,020 ringgit.

Other traded months rose between 95 and 150 ringgit. Overall trade shot up to 16,835 lots of 25 tons each.

Oil dropped more than a dollar to near $96 a barrel on Thursday, as the deepening crisis on Wall Street rattled markets, despite a surge of $6 a day ago after a fall in weekly US crude stocks. Importers from China, the world’s largest vegetable oil buyer, have defaulted on palm oil shipments, heightening fears of a massive stock congestion in Asian producing countries.

News of the China defaults comes on the heels of Indian palm oil buyers trying to defer some shipments on Wednesday after a heavy sell-off in vegetable oil markets, while traders said Pakistan had yet to cover its needs for the fourth quarter.

Indonesian crude palm oil prices eased, tracking recent falls in Malaysia’s market while buyers sped up delivery before the Eid-ul-Fitr holiday in early October.

The state marketing centre in Jakarta sold crude palm oil at 5,182 rupiah ($0.551) a kg, down from 5,312 rupiah a kg on Tuesday taking cue from Malaysia’s recent sharp fall.

The centre did not sell any crude palm oil from Belawan and Dumai port in North Sumatra on Wednesday, which is the benchmark for the auction prices.

In Jakarta, refineries offered refined, bleached, deodorised (RBD) palm olein, which is used in cooking oil, at 6,000 rupiah a kg, up from 5,800 rupiah a kg on Wednesday.

In Malaysia’s physical market, crude palm oil for September and October shipments in the southern region was 2,200/2,220 ringgit. Trades were done between 2,100 and 2,200 ringgit.—Reuters