26/10/2007 (Business Times) - Malaysian palm oil futures surged to a record high today as crude oil hit a record and Indonesia raised export taxes for the commodity.
Palm oil is up 40 per cent this year on strong global demand, an expected shortfall in supplies from October and support from rival soybean oil and crude oil markets.
The benchmark January contract on the Bursa Malaysia Derivatives Exchange rose RM89, or 3.3 per cent, to RM2,796 a tonne. By 0758 GMT, the contract was at RM2,776, up RM69.
“Palm oil keeps breaking records almost every week on the back of crude and now the Jakarta tax has just given that extra little push,” said a dealer with foreign trading firm.
“Whether it goes past the RM2,800 level is anyone’s guess but at these high prices, players are going to start to take profit.”
But other traders said the strength of the spillover effect from the crude oil market to palm oil and its rival soyoil meant that going past RM2,800 was possible.
US oil prices and Brent crude shot up to new highs today on tensions in the Middle East and worries over energy supply shortages ahead of the northern hemisphere winter.
US crude for December jumped to US$92.22 a barrel, and was at US$91.55 at 0758 GMT, up US$1.09. London Brent crude also hit a new high of US$89.30.
December soyoil futures on the Chicago Board of Trade also followed suit today, rising nearly 1.1 per cent to 41.35 cents per pound by 0758 GMT.
Palm oil and soyoil are increasingly tracking movements in the crude oil market because of growing demand for the commodity for use as a feedstock for biodiesel. Indonesia raised palm oil export taxes for November to 9 per cent and 10 per cent depending on the product, from 6.5 per cent and 7.5 per cent in October.