Malaysia's crude palm oil futures hit new high on surge in oil prices

KUALA LUMPUR (Thomson Financial) - Crude palm oil (CPO) futures traded on the derivatives exchange of the Malaysian bourse hit a fresh record on Wednesday after global crude oil prices rose above 98 US dollars per barrel for the first time.

At 3.11 pm, the CPO futures contract for January delivery was up 30 ringgit at 2,990 ringgit per metric ton, off an intraday record of 3,007 ringgit.

"Looks like CPO prices can easily stay at these levels in the immediate term, that is in the range of 2900 ringgit per ton to above 3000 ringgit under current circumstances, especially with regard to crude oil production and a weak US dollar,'' said Yin Shao Yang, plantations analyst at Kenanga Research.

"I see strong CPO prices at least until the middle of next year.'' Since the beginning of this year, CPO prices have been closely tracking movements in the oil markets after Malaysia said it will start mass production of a palm oil-based biodiesel next year.

Palm oil has traditionally been used as a cooking oil. China and India are the two major buyers of Malaysian palm oil. Oil prices powered past 98 US dollars in Asian trade Wednesday for the first time as the greenback sank to a new low amid expectations of further declines in US energy reserves.

Speculators were also seen driving up the market, with commodities seen as s safe haven against the problems caused by the US subprime mortgage crisis.

New York's main contract, light sweet crude for December delivery, was recently trading up 1.16 dollars at 97.86 dollars a barrel, up from its closing record of 96.70 on the New York Mercantile Exchange on Tuesday.

The contract earlier hit an all-time trading high of 98.03 dollars.

(1 US dollar = 3.33 ringgit) .

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