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Date
 23/01/2002
News Provider
 Mahamad Rodzi Abdul Ghani
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 NULL
Headline
 MALAYSIAN PALM OIL SEEN HOLDING RM1,200

SANDAKAN, Malaysia, Jan 22 (Reuters) - Malaysian palm oil futures areexpected to hold around 1,200 ringgit ($315.78) in the first half of 2002on increased imports by China and flat output in Malaysia, a leadingindustry official said on Tuesday."I can foresee, the price for the first half should easily stay ataround 1,200 ringgit/tonne (third-month basis)," Emerson Liau Yong Hwa,chairman of the Incorporated Society of Planters (ISP) told Reuters inSandakan, a thriving commodities trading town in the eastern state ofSabah on Borneo.Sabah is Malaysia's largest palm oil growing area, accounting for morethan 30 percent of production in the world's biggest producer.On the futures market on Tuesday the third-month April contract was1,237 ringgit, up 29 ringgit.Liau said China was expected to increase palm oil imports to 2.4million tonnes in 2002, up from 1.4 million last year, following its entryto the World Trade Organisation (WTO).A slowdown in global rapeseed and sunseed production, which wouldencourage buyers to turn to palm oil, was also supportive.Liau said he expected prices to remain around 1,200 ringgit during thesecond half of 2002 due to expectationa of stronger demand from China andIndia -- Malaysia's main buyers -- and also a slowdown in localproduction.Industry sources in Sabah said Malaysia's crude palm oil production wasseen around 11 million tonnes in 2001, down from 11.4 million in 2000.This year's output was expected to be flat at around 11 million tonnes,they said.

REPLANTINGLiau said the current replanting programme, in which the government hadencouraged farmers and estates to cut down ageing trees and replant, and areduction in the use of fertiliser because of last year's sagging pricecould further help curb production growth in 2002.He said production was expected to fall by 25 percent in the firstquarter of this year compared with the same period last year."If this trend persists throughout the year, there could be loweroutput in 2002," Liau said without elaborating.Sabah overtook the state of Johor in Peninsular Malaysia as thecountry's main growing area in 2000 due to a rapid expansion of area.Liau said the area in Sabah showed an increase of more than 30 percentin the last five years, with plantations in the state currently coveringaround 1.1 million hectares.But Liau said further expansion would be limited in Sabah because ofdifficulties in getting suitable new areas."Good, suitable land seems to be getting scarce. Some are too remote,"said Liau.The Incorporated Societe of Planters (ISP) groups executives andplantation managers and works to improve knowhow in the sector.


ECONOMICS & INDUSTRY DEVELOPMENT DIVISION
Malaysian Palm Oil Board ( MPOB ) Lot 6, SS6, Jalan Perbandaran, 47301 Kelana Jaya, Selangor Darul Ehsan, MALAYSIA.
Tel : 603 - 7802 2800 || Fax : 603 - 7803 3533