KUALA LUMPUR, Jan 9: Malaysian crude palm oil futures climbed 1.4 per cent on Wednesday, to hit a record, as strengthening crude oil and hopes of a cut in Indian edible oil duty boosted prices.

Palm oil prices have been fuelled in recent weeks by a cocktail of booming demand across Asia, tight supplies in Malaysia and surging global crude and vegetable oil markets.

The market is looking at crude oil, it has risen and there are reports that it will go up further, a dealer with a local broker said.

Indian duty cuts should come in anytime and we have yet to see supplies improve from the flood-hit areas. The benchmark March contract on the Bursa Malaysia Derivatives Exchange rose as high as 43 ringgit to 3,204 ringgit ($982) per ton, surpassing a high of 3,188 ringgit reached on Monday. The contract finished at 3,201 ringgit per ton.

Other traded months rose between 6 and 40 ringgit.

Overall trade stood at 10,417 lots of 25 tons each.

In July 2007, India reduced import duty on crude palm oil to 45 per cent from 50 percent to check rising inflation. Duty of soyabean oil was cut to 40 per cent from 45 per cent.

India, which imports around 40 per cent of its annual consumption of 13 million tons, buys palm oil from Malaysia and Indonesia and soyaoil from Argentina and Brazil.

Vegetable oils, such as palm and soyabean oil, often track crude oil prices because of growing use of edible oils in the making of biofuels, which compete with petroleum.

Supplies are still not back to normal and we expect January production will also take a hit, said one dealer estimating production to fall 10 per cent this month from December.

Output in Malaysia probably dropped 18.2 per cent to 1.35 million tons in December from a month ago, the median estimate of five plantation houses showed.

Traders said the market awaited December output, exports and stocks data to be unveiled by Malaysian Palm Oil Board on Friday. The cargo surveyors will announce their estimates for Jan 1-10 palm oil exports on the same day.

In Malaysia’s physical market, crude palm oil for January shipment in the southern region was quoted at 3,200/3,210 ringgit a ton. Trades were done at 3,200 ringgit.—Reuters