KUALA LUMPUR, Nov 26: Malaysian palm oil futures surged 5.5 per cent to hit a two-week high as market players scrambled to short cover on expectations that crude oil would claw back some gains, traders said.

Palm oil has lost more than two-thirds of its value from a record high of 4,486 ringgit per tonne in March on a mix of swelling stocks, and weaker food and fuel demand, which are markers of a global recession.

The benchmark February palm oil contract on the Bursa Malaysia’s Derivatives Exchange rose as much as 84 ringgit to 1,604 ringgit ($443.1) per ton before closing 78 ringgit up at at 1,598 ringgit.

The market closed firmer for first time in 15 days on the strong demand in the cash market. There is a large line-up of vessels for the first week December shipments, said a trader.

Crude oil rose after China cut rates to boost the economy.

Indian Farm Minister Sharad Pawar said on Wednesday the government had no plan to tax crude palm oil imports, a move which could boost demand for the vegetable oil.

Indonesia, the world’s largest palm producer, is maintaining its zero per cent palm oil export tax in December, while it has cut the December palm oil base export price to $415 a ton from $573, the trade ministry said on Wednesday. The changes will take effect on Dec. 1. The state marketing centre in Jakarta sold palm oil at the top price of 5,583 rupiah ($0.47) per kg.

Producers in Medan -- home to Belawan port, Indonesia’s key port for palm oil exports -- did not hold an auction on Wednesday.

Refiners in Jakarta sold refined, bleached, deodorised (RBD) palm olein, which is used in cooking oil, at about 6,150 rupiah per kg.—Reuters