Malaysian crude palm oil futures climbed 8.2 percent on Monday, the biggest increase in a single day, as supply concerns and speculative funds propelled global vegetable oil markets to new highs. Palm oil has gained 42 percent this year as gloomy crop outlooks in China and India have stoked new fears of tight supplies in the coming months.
"Consumers are short as they underestimated the strength of this Bull Run," said Martin Bek Nielsen, executive director of Malaysia's leading planter United Plantations. "Sellers are holding on to their positions and forcing consumers to buy at higher levels." The benchmark May contract on the Bursa Malaysia Derivatives Exchange rose as much as 327 ringgit to a record 4,332 ringgit ($1,355) a tonne.
The contract finished up 325 ringgit at 4,330 ringgit. Chicago soyabean futures stormed to a record high in Asian trade on Monday and strong buying also pushed up China's Dalian soyaoil futures and Indian edible oil markets to new highs.
Palm oil prices have also been pushed up by Indonesia's plans to raise export duties and investors viewing the commodity as a hedge for inflation. "Palm oil is the new gold," said a trader with a local commodities firm. "Any positive move in crude oil and soyaoil heightens the interest in palm oil and sends the funds in."
Other traded months rose between 230 and 336 ringgit. Overall trade stood at 17,931 lots of 25 tonnes each. A leading Indian trade body on Sunday forecast cold weather would cut the nation's rapeseed output by as much 15 percent, boosting prospects of more palm oil shipments to the world's second largest edible oil importer.
"Bad weather issues are certainly pushing this market up as Dorab Mistry predicted," said an analyst with a foreign commodity broker. "The 4,500 ringgit level might be reached quicker than what Dorab predicted, by the summer at least." Dorab Mistry, a director of India's Godrej International Ltd and considered the leading authority on the market, said he expected prices to climb to 4,500 ringgit between September 2008 and February next year.
For a factbox on price forecasts made by industry gurus Dorab Mistry, Thomas Mielke and James Fry see. Global vegetable oil prices often track energy markets as rapeseed and soyabean oils get channelled into biodiesel in Europe and America.
This puts more pressure on palm oil to satisfy food demand and shipments to Europe and other regions rise. Oil prices were steady on Monday, finding support from a sharp decline in the US dollar and expectations oil cartel Opec would leave its output unchanged. In Malaysia's physical market, crude palm oil for March shipment in the southern region were quoted at 4,290/4,300 ringgit a tonne. Trades were done between 4,150 and 4,290 ringgit.