KUALA LUMPUR, Dec 26 : Malaysian crude palm oil futures finished 1.99 per cent higher on Friday supported by strong exports and gains in crude oil prices.

Exports of Malaysian palm oil products for Dec. 1-25 rose 24 per cent to 1,345,325 tons from 1,087,865 tonnes shipped between Nov. 1 and 25, cargo surveyor Intertek Testing Services said on Friday.

Palm oil is now the world’s cheapest vegetable oil and demand is coming back. We have also seen unusual buying from India due to concerns that the Indian government may raise import duty on palm oilsaid a trader with a Malaysian commodities brokerage.

Crude palm oil prices have tumbled two-thirds from a March peak of 4,486 ringgit a ton following the bursting of speculative bubbles in commodity prices.

Worries about swelling palm oil inventories as a global economic downturn weakens demand for edible oils have also weighed on prices.

Prices were supported on Friday by traders continuing to eliminate their positions ahead of the weekend. The market will be closed on Monday for a Muslim religious holiday.

Whatever they sold, they are buying back. Nobody wants to be very short or very long over the long weekend, said the trader.

The benchmark March 2009 contract on Bursa Malaysia’s Derivatives Exchange ended up 31 ringgit at 1,590 ringgit ($456.9) per tonne. Gains in other traded months ranged between 20 ringgit and 35 ringgit.

Overall trade rose to 7,621 lots of 25 tons each from the usual 5,000 lots.

In Malaysia’s physical market, crude palm oil for both December and January shipments in the southern region saw bids and offers at 1,595/1,605 ringgit while the central region were at 1,595/1,600. Trades were quoted at 1,590-1,600 ringgit a ton for both regions.

In Indonesia, the Jakarta-based state marketing centre will not hold any more palm auctions for this year. The next will be on Jan. 5, 2009.—Reuters