Malaysian crude palm oil futures surged to a record high of 2,959 ringgit on Thursday as fast-rising crude oil and soyaoil markets saw investors scrambling to cover short positions. Palm oil, which hit its fifth record high in three weeks, is poised to break past the 3,000-ringgit level as investment funds continue to flood into the market, traders said.
Indonesian palm oil also jumped to record highs and Dalliance's refined palm oil futures rose strongly. The benchmark January contract rose as much as 79 ringgit, or 2.7 percent to 2,959 ringgit ($889). By the end of the trading session, contract settled 50 ringgit up at 2,930 ringgit. "The fundamentals are getting ignored in this mad rush to make palm oil prices follow in the footsteps of crude and soyaoil markets," said one trader.
"Once investor funds push palm oil to the 3,000-ringgit level and start selling off, there will be a great massacre for the rest of us." Other traded months rose between 43 and 62 ringgit. Overall volume stood at 12,853 lots of 25 tonnes each.
Palm oil, up nearly 47 percent this year, had initially been rising on strong global demand and an expected supply shortfall in the coming months, traders said. But recent news of rival producer Indonesia raising export taxes and talk of China slashing import duties for edible oils, as well as the strength of crude and soyaoil markets, constantly boosted palm oil prices to record highs.
Oil leapt nearly 2 percent to top $96 on Thursday, nearing its all-time peak after an unexpected sharp fall in US crude stocks and data showing strong economic growth. US oil for December delivery rose as high as $96.24 a barrel in electronic trade., it was up 76 cents at $95.29. Chicago Board of Trade soyaoil ended up 0.35 cents to 1.02 cents per lb.
On Wednesday, with December up 0.63 at 42.31 cents to track rallies in crude oil. December rallied to a new contract high of 42.69 cents per lb. also the highest price for a spot contract in nearly 33 years.
The contract was up 0.8 percent to 42.65 cents per pound. Palm oil and soyaoil increasingly track movements in the crude oil market because of growing demand for both commodities as feedstock for bodiless. The outlook for exports of palm oil, used in products ranging from cosmetics to confectioneries, is darkening, traders said. "How much can you possibly buy at these high prices?" a trader with a local brokerage said.
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