29/04/2008 (Reuters, India) - Malaysian crude palm oil futures rose 1.1 percent on Monday as global vegetable prices climbed on the back of record crude oil prices, traders said.

But gains were not so strong on fears that demand for palm oil will be diverted to Indonesia after it cut its export taxes and a strong production cycle in Malaysia had already kicked in.

Palm oil prices tumbled around 23 percent from record highs last month on a bearish concoction of ringgit strength and dismal Asian demand although some traders say a recovery in buying is on the cards.

By the midday break, the benchmark July contract KPOc3 on the Bursa Malaysia Derivatives Exchange rose 39 ringgit to 3,458 ringgit ($1,097) per tonne after going as high as 3,480 ringgit.

"Any rises in palm oil will come externally from U.S. and China soy markets. Record crude oil may be a factor in the days to come, although it will be support from a distance" said a trader with a foreign commodities brokerage.

Other traded months rose between 41 and 64 ringgit <0#KPO:>. Overall trade stood at 1,858 lots of 25 tonnes each, almost half of the usual 5,000 lots.

May soyoil BOK8 at the Chicago Board of Trade rose 0.33 cent in Asian trade on Monday after closing 1.20 cent weaker last week. The most-active September soyoil contract DBYU8 on the Dalian Commodity Exchange edged higher.

Oil struck a record high at $119.93 a barrel on Monday, extending the previous session's rally, as a strike closed a major British oil pipeline and as new violence in Nigeria reignited supply fears. [ID:nSYD161854]

But other traders pointed out Indonesian export taxes, which were cut to 15 percent in May from 20 percent in April late Friday, will cap palm oil prices rises.