5/7/05 (The Edge News) -  Strong demand for crude palm oil (CPO) and surging crude oil prices saw the benchmark September delivery for CPO futures hitting the two-week high at RM1,487 per tonne and it is expected to cross the RM1,500 level.

Analysts are already expecting the third-month contract to hit RM1,520, pointing out the CPO futures for November was already at RM1,521.

Investors have turned their focus on CPO following the record oil prices as they viewed palm oil as an alternative energy source due to biodiesel, with plantation stocks being the main beneficiaries.

Light crude oil for August delivery was trading at US$73.45 (RM268.14) per barrel on July 5 on expectations of higher US consumption.

Analysts said that plantation stocks seemed to be tracking the crude oil prices rather than CPO prices.

Plantation counters were among the top gainers on Bursa on July 5. Kuala Lumpur Kepong Bhd was up 40 sen to RM10.50 while IOI Corporation Bhd and PPB Palm Oils Bhd rose 20 sen each to RM15 and RM6.90 respectively.

Asiatic Development Bhd rose eight sen to RM3.26, Sarawak Oil Palms Bhd six sen to RM1.95 while TH Plantations Bhd and Inch Kenneth Kajang Rubber plc added five sen each to RM1.95 and 54 sen respectively.

Analysts added that strong demand for Malaysian palm oil, mainly from China and Europe, was also likely to boost prices and exports after months of slowdown.

They added that shipments had increased to China and Europe and they expected the demand to continue.

In May, Malaysia’s exported RM1.91 billion worth of palm oil, which accounted for 4% of total exports.

News wire reported that palm oil exports were expected to rise to around 1.2 million tonnes to 1.3 million tonnes in July from 1.08 million tonnes estimated in June, quoting surveyor Societe Generale de Surveillance. Exports stood at 1.16 million tonnes in May