19/05/2008 (Commodity Online), KUala Lumpur - In an attempt to stabilize domestic rice supply in the country, Malaysia is prepared to offer palm oil in exchange for rice to any rice-exporting country.
Speaking to reporters here, Malaysia’s Plantation Industries and Commodities Minister Peter Chin said, “Malaysia is ready to offer palm oil to any exporting country "that is ready to give us rice of suitable quality".
However, some analysts are worried the plan could affect the Asian commodity and currency markets.
"Our country needs to buy rice and we have a commodity that more rice-exporting countries would need so it would be logical," he said.
Malaysia is the world's second-largest producer of palm oil after Indonesia, and imports nearly 27 per cent of its rice needs annually. It hopes to cut rice imports to 14 per cent by 2010.
The proposal may lead to swoops with rice-exporting countries such as India, which is one of the world's largest palm oil importers by volume.
Chin will be visiting India later this month to attend a palm oil conference.
However, commodities experts are worried that similar deals would be unsettling to orderly markets if other raw materials, such as rubber or rare metals, even energy, were moved around in a series of large off-market deals with no formal pricing.