05/04/2011 (Live Trading News) - Palm oil futures rallied on Monday in Kuala Lumpur, an increase in prices of soyoil will increase demand for palm oil.

Conditions and the pricing of Soyoil look set to see Palm Oil hit new highs in the coming months.

Soyaoil has been on the rise for over a week following the US Department of Agriculture (USDA) report showing a shortage of soyabean stocks despite a high planting forecast, which has widened its premium to palm oil.

Palm Oil June 2011 traded higher on the Bursa Malaysia Derivatives Exchange up 1.3 percent at 3,382 ringgit ($1,117) a tonne after going as high as 3,392 ringgit the highest level since March 22.

Overall volume stood at 14,607 lots at 25 tonnes each compared to the usual 15,00 lots.

Benchmark prices fell 12 percent in the first quarter, having tracked other commodities lower as unrest in the Middle East and an earthquake in Japan sent investors scrambling for perceived safe-haven assets.

In the physical market last week, Malaysian refined palm oil widened its discount to competing Argentine soyaoil to $70 per tonne, from trading at a premium at the start of the this year and end 2010.

Malaysia’s palm oil exports have progressively fallen since December as erratic weather and floods pushed prices above competing soyoil.

Traders are now expecting March palm oil output in Malaysia to rise by double-digits after two years of weak yields that will attract price-sensitive buyers India and China, the world’s top two vegetable oil consumers.

US crude oil hitting a 2-1/2 year high on Monday, also supported palm oil and other vegetable oil markets. US soyaoil rose 0.4 percent in Asian trade, moving in tandem with grain markets after last week’s bullish USDA report.

The most-active September 2011 soyaoil contract on China’s Dalian Commodity Exchange ended up 1.1 percent.