Malaysia, the world's top producer of palm oil, said Thursday it will allow market forces to determine crude palm oil prices and ruled out any attempt to control rising prices due to strong demand.

Peter Chin, minister of plantation industries and commodities said Malaysia did not think there was an "optimum" price for the commodity which is also in short supply due to recent flooding in Malaysia's southern Johor state.

"Let the market judge on crude palm oil prices. This is the market mechanism, nobody has the ability to control it," he told reporters.

Crude plam oil futures contracts traded on the Malaysian derivatives market crossed the 3,000 ringgit (909 dollars) mark for the first time this month, with the January contract hitting an all-time high of 3,013 ringgit.

Palm oil prices now average 2,500 ringgit per tonne.

Chin had previously warned industry players that land for growing the crop was running short in Malaysia, the leading global exporter of palm oil.

Oil palm cultivation occupies 67 percent of Malaysia's total agricultural land, and some 500,000 people are engaged in the sector. Malaysia hopes palm oil production will hit 20 million tonnes by 2020.