KUALA LUMPUR, June 9: Malaysian crude palm oil futures jumped 2.8 per cent to hit a near two-week high on Monday as record high crude oil showed little sign of falling and rekindling possible demand for vegetable oil-based biofuels.

Along with soyoil markets from United States to China, palm oil has been given a breath of life from raging crude oil markets, gaining roughly 21 per cent so far this year.

But palm oil prices are still 17.5 per cent off an historic high of 4,486 ringgit per ton hit in early March, thanks to lacklustre overseas demand and rising production at home.

The benchmark August contract on the Bursa Malaysia Derivatives Exchange rose as much as 100 ringgit to 3,700 ringgit ($1,134) per ton, a level unseen since May 27. But the contract only settled up 60 ringgit at 3,660 ringgit after some quick profit-taking.

Volumes are low, so the jumps in crude oil and soyaoil are exaggerated in palm oil markets, said a trader with a foreign brokerage.

No solid domestic fundamentals support this rise as the market did not go beond 3,700 ringgit. There may be a correction soon. Other traded months rose between 50 and 88 ringgit .

Overall volumes stood at 9,348 lots of 25 tons each. Malaysia’s May palm oil reserves edged up 0.6 per cent from April as production outstripped a small increase in overseas demand for the vegetable oil, a Reuters poll showed on Monday.

Palm oil output in Malaysia, the world’s second-largest producer, probably rose 5.5 per cent to 1.4 million tons in May, according to a median estimate of five plantation houses.

Although palm oil is still the cheapest vegetable oil, demand has been slackening. Data from cargo surveyors show exports for May fell about 6 per cent to roughly below 1.25 million tons.

But traders have said the second quarter is traditionally a slow period for Asian demand as there are no festivals around the corner.

Oil eased on Monday after the biggest one-day price gain in the history of the market left traders and analysts divided over the explanation.—Reuters