Dec. 26 (Bloomberg) -- Palm oil prices in Malaysia, the global benchmark, rose to a record today 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 subsidize 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 today 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 percent, to 3,087 ringgit ($924) a ton on the Malaysia Derivatives Exchange today before closing at 3,080 ringgit a ton.

Supply Shortage

``Palm oil prices have gone up in spite of record-high stockpiles in Malaysia because the market is anticipating tight supply next year,'' Alvin Tai, analyst at OSK Research Bhd., said by phone from Kuala Lumpur today.

Palm oil inventories in Malaysia, the second-largest producer of the commodity, climbed 16 percent to a record in November as output reached its highest ever, the Malaysian Palm Oil Board said on Dec. 10.

Agricultural products have been among the best-performing commodities this year. Palm oil has gained 56 percent, soybeans 75 percent and soybean oil 62 percent. Goldman Sachs raised its 12-month forecast for soybeans by 61 percent to $14.50 a bushel from $9 a bushel in a Dec. 11 report.

Soybean oil futures traded on the Dalian Commodity Exchange have risen 40 percent this year. The most-actively traded contract for May delivery gained 200 yuan, or 2 percent, to close at 10,146 yuan ($1,382) a ton.

China, the biggest buyer of vegetable oils, imported 29 percent more of the commodities in the first 11 months of this year compared with a year earlier, customs data showed Dec. 11.

Imports of vegetable oil totaled 7.71 million metric tons from January to November, the Beijing-based customs office said. Palm oil imports gained 7.1 percent in the first 11 months while the country's imports of soybean oil and canola oil almost doubled and gained eight-fold respectively.

Indonesia and Malaysia produce 90 percent of the world's palm oil, the main substitute for soybean oil.

To contact the reporter on this story: Pratik Parija in New Delhi at pparija@bloomberg.net

Last Updated: December 26, 2007 05:32 EST