The Malaysian Government has been forced to make an emergency palm oil injection into supermarkets and food stores across the nation to break a wave of panic-buying after prices of cooking oil soared.

The crisis, which has emptied shops completely of cooking oil, has already prompted palm-oil rationing in a country that is one of the world’s largest producers of the highly sought-after commodity.

The rush to buy up palm oil coincides with growing fears of cooking oil shortages before the Chinese New Year celebrations with giant banquets and a general rise in the consumption of fried food.

Inventories are already low: the ethnic diversity of Malaysia means that Christmas, the Islamic festival of Eid al-Fitr and the Hindu celebration of Diwali are all marked with equal vigour, with festivities centered chiefly on eating.

Refineries and palm-oil producers in Malaysia have been ordered to step up monthly output of subsidised oil to 70,000 tonnes in a near 30 per cent increase.

The run on cooking oil began on Monday, as traders in Kuala Lumpur and elsewhere in East Asia pushed the price of palm oil to record highs. It is currently trading at 3,166 ringgit (£489) per tonne. And although Tuesday saw a modest bout of profit-taking and a drop in palm-oil prices, few analysts believe the commodity is nearing its peak.

Palm oil has been the beneficiary of a combination of seismic shifts in global commodity markets. Because of palm-oil’s increasing appeal as a cheap source of raw material for biofuel ethanol, the price of what was once purely a foodstuff now echoes the global price of crude oil. More extreme weather, including heavy flooding in several of Malaysia’s key palm oil growing regions, has also taken a toll on price stability.

The behaviour of farmers elsewhere in the world has also had an impact on palm oil prices: the biofuel shift has also caused corn prices to soar, prompting growers in the United States and elsewhere to plant less soya.

As the price of soya oil has risen, foodmakers and households in India and China have turned to palm oil as an alternative, creating a demand that analysts believe can only increase as consumers in those nations become wealthier and develop a greater taste for oil in cooking.

In the longer term, analysts believe that Indian demand will rise further as import taxes on palm oil – currently standing at 45 per cent – are cut back in an effort to stem rising inflation.

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