Palm oil prices are setting a record in Malaysia

Global benchmark futures price at 51.5¢/lb

By Tom Stundza -- Purchasing, 2/20/2008 9:41:00 AM

Palm oil futures in Malaysia, the global benchmark, rose to a record $1,135/metric ton (51.5¢/lb) this morning as higher crude oil prices in the U.S. boosted the global appeal of  the biofuel feedstock that already is used in Asia as a gasoline and heating oil alternative. The futures are traded on the Malaysia Derivatives Exchange in Kuala Lumpur. 

Shipments of palm oil from Malaysia to China, the world's biggest buyer of vegetable oils, have jumped this month after almost half of China’s rapeseed area was affected by the worst snowstorms in decades, according to the Bloomberg News Service. Vegetable oil supplies may be further squeezed as palm oil exports from Indonesia may drop 10% this year to 9.4 million metric tons as domestic biodiesel demand is expected to more than double, Investor Daily Indonesia reports.

“There are no signs that these high prices will curb demand,'” says Li Jianlei, Beijing-based analyst at Cofco. Malaysia's palm oil exports rose 34% to 762,273 metric tons in the first 20 days of February, compared with the previous month, says cargo surveyor Intertek. China was the main destination, taking 23% more than a month earlier.