Malaysian crude palm oil futures rose 2.7 percent to hit a new high on Friday as China scrambled to lock in supplies, with global appetite for vegetable oils underlined by a surge in Malaysia's palm exports.
Used in products from margarine and lipstick to biofuels, palm oil has been driven by rising crude oil and record soyoil prices and on plans by Indonesia, the world's largest producer, to hike export taxes.
Prices were given extra impetus by news that 40 percent of China's planted rapeseed acreage was damaged by harsh winter weather, with the extra demand helping boost Malaysia's palm oil exports by 53 percent on the month in the first half of February.
The benchmark April contract on the Bursa Malaysia Derivatives Exchange rose as much as 93 ringgit to hit a record of 3,544 ringgit ($1,097) a tonne. By the midday break, the contract traded up 46 ringgit at 3,497 ringgit.
"The surge in soyoil and exports all point to strong Chinese buying. They will need to buy regardless of the cost because essential food demand has to be met," said a trader with a foreign brokerage.
Other traded months rose between 2 and 64 ringgit. Overall trade almost doubled to 9,173 lots of 25 tonnes each from the usual 5,000 lots. US soybean futures on the Chicago Board of Trade rallied on Thursday, led by soyoil which hit an all-time high on strong Chinese demand for vegetable oils, traders said.
Soyoil competes with palm oil for the same exports and their prices often move in tandem. Exports of Malaysian palm oil products for February 1-15 surged 53 percent to 603,389 tonnes from 394,395 tonnes shipped between January 1 and 15, cargo surveyor Intertek Testing Services said.
Another cargo surveyor, Societe Generale de Surveillance, is due to release its numbers later on Friday. Last month, Malaysian palm exports were on a downtrend as buyers across Asia and Middle East held back purchases. Traders now say that vegetable oil reserves in countries like Turkey are falling and need to be replenished.
"It is all good timing," said an analyst with a local brokerage. "The record palm oil stock levels will more than cover all this demand and by end-February, it might be a different scenario of roaring demand and lesser supplies." Shares of Malaysian planters IOI Corp, Kuala Lumpur Kepong and Sime Darby fell as investors took profit, dealers said. The stock market's plantation index fell nearly 2 percent, outpacing a 1 percent fall in the overall index.