KUALA LUMPUR, July 12: Malaysian crude palm oil futures ended 1.2 per cent higher on Thursday as concerns over tight supply and expectations the US government would lower its estimates for soybean closing stocks lifted the market.

The benchmark September contract on the Bursa Malaysia Derivatives Exchange finished up 31 ringgit to 2,615 ringgit ($758) a ton.

The issue of the first six months of supply being lower compared to the last year has been factored in very favourably, one dealer said.

Malaysia's crude palm oil production for the first half of 2007 fell 8.2 per cent to 6.7 million tons from 7.3 million tons in the same period last year, according to official data.

Palm oil is just around 5 per cent off a historic high of 2,764 ringgit reached in early June on robust demand from top importers China and India and dwindling supplies at home.

The palm oil market is carefully watching the soybean futures at the Chicago Board of Trade since the USDA monthly crop report is expected to show a decrease in stocks, another trader said.

Malaysian palm oil tracks the US soyaoil market because both commodities are used in products ranging from cookies to lipstick and biodiesel.

September palm oil on Singapore's Joint Asian Derivatives Exchange gained $3 to $750 a ton with other distant months mostly lower in thin trade.

In the physical market, crude palm oil for July shipment in Malaysia's southern region was quoted at 2,680/2,690 ringgit a tonne. Trades were done between 2,680 and 2,700 ringgit.—Reuters