19/10/2007 (Reuters) - MALAYSIAN crude palm oil futures crude palm oil futures surged to a record high today, driven by strong overnight gains in rival soyabean oil and crude oil markets.

The benchmark January contract rose as much as RM60, or 2.2 per cent, to RM2,795, before paring gains to trade at RM2,780 by the end of the morning session.

“We are living in an era where the palm oil market has forgotten about its own domestic fundamentals and is more influenced by soyabean oil and crude oil,” said a leading trader.

Other traded months rose between between RM43 and RM65. Overall volume stood at 6,149 lots of 25 tonnes each.

The commodity’s climb of nearly 8 per cent since last week has split the market, with some players saying export demand will dry up while others say palm oil remains at a discount even at these high prices.

“Palm prices are red hot and they are going to burn some buyers,” said a dealer with a foreign brokerage. “If palm oil continues in this way, soyabean oil is going to be much cheaper.”

Fears of declining exports have been growing as buyers have already locked in supplies for a slew of festivals in Asia, which began in September.

The market is waiting for export estimates for the first 20 days of October, due to be unveiled over the weekend by cargo surveyor Intertek Testing Services.

“But let’s not forget that soyabean oil and other vegetable oils have also been rising at a pretty fast rate, so there will always be demand for palm oil,” said a plantation official. - Reuters