15/01/2008 (The Star Online), Petaling Jaya - Crude palm oil (CPO) futures on Malaysia Derivatives Exchange hit a new record of above RM3,400 per tonne yesterday on supply concern amid surging world demand for food and biodiesel consumption. 

The CPO March delivery rose RM134 to RM3,414 after hitting a high of RM3,420 from last Friday's record of RM3,280.

A trader said: “It will be interesting to see if CPO can hit RM3,500 per tonne tomorrow given current bullish overseas factors.”

The local market sentiment was well supported by rallies on both soybean and soymeal futures in China yesterday following soybean futures on the Chicago Board of Trade hitting a record of US$13.14 per bushel after the US Department of Agriculture reported that global production would fall as demand increased for animal feed, vegetable oil and fuel made from crops.

China's Dalian soyoil futures reached a new high, rising as much as 3.2% to 11,018 yuan a tonne, while soymeal futures also hit the daily limit as traders speculated higher soybean costs would push prices of animal feed later in the year when the livestock sector recovered. 

The report also said China's imports of soyoil in the year through September could reach 2.8 million tonnes, up 200,000 tonnes from its December forecast.

Meanwhile, Indonesia is planning to temporarily scrap import tariff on soybean to stem an increase on the prices of its food staples like tempe and tofu made from soybean.

On the local front, the Malaysian Palm Oil Board last Friday reported that palm oil stockpiles dropped 7.1% to 1.68 million tonnes in December last year from November, while production fell 15.4% to 253,900 tonnes, the worst output decline in a year.

This sparks supply concern in the next three months, especially with the flash floods in key oil palm areas in the country.

Most plantation analysts are seen revising upwards their average CPO price forecasts in 2008 and 2009, ranging from RM2,500 to RM3,100 per tonne.

Since late October 2007, share prices of Malaysian plantation stocks have appreciated by 26% to 31%.

Hogging the gainers' list on Bursa Malaysia yesterday were second-tiered plantation stocks like Sarawak Plantation Bhd, IJM Plantations Bhd, Rimbunan Sawit Bhd and United Plantations Bhd, which were playing catch-up with the highly-priced plantation giants like IOI Corp Bhd, Kuala Lumpur Kepong Bhd and Sime Darby Bhd.