JAKARTA, Jan 6: Malaysian palm oil futures extended a recent rally, climbing nearly 8 per cent to finish at a three-month high on Tuesday, on stronger crude oil prices and short-covering, traders said.

The benchmark March palm oil contract on the Bursa Malaysia’s Derivatives Exchange rose 143 ringgit, or 7.78 per cent, to 1,980 ringgit ($565) per ton, the highest closing level since Oct. 6.

Palm futures have bounced back recently thanks to strong exports and crude oil prices rose in response to tension in the Middle East. The benchmark palm price has risen nearly 50 percent since hitting its October 28 low of 1,331 ringgit.

The market was very strong partly because of panic buying for short-covering, said a trader at a Kuala Lumpur-based brokerage.

It is hard to say if there is going to be any profit-taking soon because apparently the market is just too strong, he said.

Other traded contracts rose between 120 ringgit and 140 ringgit. Overall volume was 16,707 lots of 25 tons each.

The analyst said other positive factors supporting palm prices included market concern that soybean production may be affected by dry weather this year in the northern hemisphere.

In Indonesia, world’s largest palm oil producer, the state marketing centre said it failed to sell the entire 4,500 tons of palm oil due to low bids. On Monday, it sold 2,000 tons of palm oil at a top price of 6,162 rupiah ($0.57) per kg.

Producers in Medan -- home to Belawan port, Indonesia’s key port for palm oil exports -- sold palm oil at 6,387-6,425 rupiah per kg. They did not hold a tender on Monday.

Meanwhile, refiners in Jakarta sold refined, bleached, deodorised (RBD) palm oil, used as cooking oil, at about 6,800 rupiah per kg, up from 6,500 rupiah per kg on Monday.

In the physical market, Malaysian palm oil for January deliveries were traded at 1,880-1,980 ringgit per ton in the southern and central region.—Reuters