25/12/2007 (Forbes), Kuala Lumpur - Malaysian crude palm oil (CPO) futures contracts traded on the Malaysian derivatives exchange were at a fresh record Wednesday, supported by high oil and soybean prices, and speculative buying on concerns recent floods may have hurt CPO production.

At 11.24 am, the benchmark CPO futures contract for March delivery rose 41 ringgit to 3,071 ringgit, off a new all-time high of 3,074 ringgit. The previous all-time high was 3,068 ringgit recorded on November 26.

'I think speculative buying ahead of December production figures is driving up prices at the moment,'' said Yin Shao Yang, plantations analyst at Kenanga Research.

'There could be a shortfall in CPO production in December due to the flooding and the market senses that,'' he said.

Major floods have recently hit Johor and Pahang, two of the largest palm oil producing states in Malaysia, prompting fears that CPO producition will be hurt.

Daily newspaper The Star reported yesterday that Kurnia Setia Bhd, whose 10,000 hectares of oil palm plantations are mainly in Pahang, has revised down its 2007 growth target for fresh fruit bunches (FFB) harvest to 8.5 percent from 10 percent, due to the floods that have inundated the company's plantations.

The government has already predicted palm oil output will fall short of its target this year.

Production is likely to be around 15.7-15.8 million metric tons this year, down from an earlier forecast of 16.2 million tons, said Peter Chin, the Minister of Plantation Industries and Commodities, recently.

High crude oil prices and rising soybean prices have also been supporting CPO prices, with crude oil recently trading above 93 US dollars per barrel.

CPO, a substitute for soybean oil, is also used as feedstock in the production of biofuels.