February 21, 2008
China's demand, high soy prices drive Malaysia's palm oil futures to record high
Malaysia's crude palm oil (CPO) futures surged to a record US$510 per tonne yesterday on China's soaring demand and spiraling soy and soy oil prices.
Demand from China for vegetable oils skyrocketed after more than 40 percent of its rapeseed crop was damaged by severe winter storms and rain, analysts said.
China, according to traders, was buying both soy oil and CPO, driving prices upwards as it tries to keep its inventories in check.
China is the world's biggest importer of oilseeds and vegetable oils. Rapeseed, like soy, is used to make animal feed and cooking oils.
MIMB Malaysian International Merchant Bankers (MIMB), head of research, Pong Teng Siew said the demand from China and record soy and soy oil prices appeared to be pushing CPO prices in the country.
The winter storm in China has driven prices for now and analysts see no end to it in the short run.
Malaysian officials said that the further surge in CPO prices would mostly be driven by the Chinese factor.