Soaring oil prices fuel palm oil to record high

Palm oil futures in Malaysia, the global benchmark, reached a record after crude oil soared past $93 a barrel, lifting the demand for biofuels made from vegetable oils.

Oil climbed to a high in New York as Mexico, the third largest supplier to the US, shut about a fifth of its daily output because of a storm heading for the Gulf of Mexico.

"All vegetable oils are going up because of crude oil'' prices, Hoe Lee Leng, an analyst at RHB Research Institute in Kuala Lumpur, said. The demand for biofuels will bolster the requirement for vegetable oils, he said.

Palm oil for January delivery, the most active contract, rose as much as 75 ringgit, or 2.7 per cent, to 2,875 ringgit ($860) a tonne on the Malaysia Derivatives Exchange, surpassing the October 16 peak of 2,814 ringgit.

Futures ended the morning session at 2,870 ringgit at 12:30 pm local time.

Palm oil has gained 69 per cent in the past year, spurred by higher demand in food and soaps.

The tropical oil is also being used for bio-diesel, an alternative fuel which is renewable and contains no petroleum.

China's Dalian Commodity Exchange has started trading futures based on the Malaysian contract. Palm oil for January traded at the day's ceiling of 8,424 yuan a tonne.

Soybean oil, the next most consumed oil after palm oil, rose as high as 41.78 cents a pound in after-hour trading in Chicago. This the highest since at least December 26, 1978, according to Bloomberg data.

China and India, the world's most populous nations, import palm oil to fill shortages in supplies of soybean, groundnut and canola oils. Indonesia and Malaysia make up 90 per cent of palm oil's global output.