Palm oil hits record high in Malaysia

Palm oil prices in Malaysia, the global benchmark, rose to a record on Wednesday as global demand for vegetable oils for food and alternative fuel outstripped supply.

Oilseeds and vegetable oils are gaining from Chicago to Dalian on concern world inventories are dwindling as demand rises in China and India and governments subsidise the use of edible oils for fuel. Soybeans may lead gains among non-energy commodities next year, according to Goldman Sachs Group Inc.

Soybeans and soybean oil in China, the biggest consumer of the commodity, also soared to records as traders speculated demand may outpace supplies from government stockpile sales and imports. Soybeans in Chicago reached a 34-year peak and soybean oil the highest for at least 33 years on Dec 24.

"The outlook for the grain, oilseed and vegetable oil markets remains very positive," Michael Coleman, Singapore- based managing director of Aisling Analytics Pte, which runs a $1 billion commodity hedge fund, said on Wednesday by e-mail.

"To see significantly lower prices we'll need a combination of demand rationing and excellent harvests to allow a rebuilding of inventories," he said. "That probably means significantly higher prices first."

Palm oil for March delivery rose as much as 57 ringgit, or 1.9 per cent, to 3,087 ringgit ($924) a tonne on the Malaysia Derivatives Exchange on Wednesday before closing at 3,080 ringgit a tonne.