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 Kamar Nor Aini Bt Kamarul Zaman
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 Palm Oil May Drop 4.7% as Higher Output in India Lowers Imports

08/10/2007 (Bloomberg) - Palm oil futures in Malaysia may fall 4.7 percent in the next three weeks as above-average rainfall increases oilseed production in India, probably reducing overseas purchases of the commodity, TransGraph Consulting Pvt. said.

Prices may decline as low as 2,450 ringgit ($723) a metric ton, M. Somasekhar, an analyst at TransGraph, said by phone from the southern city of Hyderabad on Oct. 5. ``The beginning of the harvesting season in India will lead to some weakness.''

Reduced imports by India, the biggest palm oil buyer after China, may further boost Malaysian stockpiles, which rose 11 percent in August to 1.45 million tons, a six-month high.

Palm oil for December delivery, the most active contract, fell as much as 29 ringgit, or 1.1 percent, to 2,570 ringgit a ton on Oct. 5 on the Malaysia Derivatives Exchange, which trades the global benchmark.

India's production of winter harvested oilseeds, including peanuts and soybeans, may rise to 16.1 million tons from 13.94 million tons a year earlier, the farm ministry said Sept. 19.

Malaysia, the world's second-largest producer of palm oil, increased output 15 percent in August to 1.56 million tons, the highest in a year, the Palm Oil Board said Sept. 10.

Palm oil reached a record in June amid rising sales to China and India. Prices have also risen on biofuel demand after crude oil tripled to a record in the past five years.

Indonesia and Malaysia produce 85 percent of the world's palm oil, used mainly as cooking oil, a cleaning agent and as a fuel additive.

Malaysia's palm oil production may total 16.8 million tons in 2008, compared with an estimated 15.4 million tons this year, according to TransGraph.

Indonesia's palm oil output may rise 8.2 percent next year to 18.4 million tons from an estimated 17 million tons this year as more trees mature, Derom Bangun, chairman of the nation's palm oil producers' association said Sept. 23 in Goa.

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