March 1, 2006	Wednesday	Muharram 30, 1427

KUALA LUMPUR, Feb 28: Malaysian palm oil fell on Tuesday after India did not execute a much-expected cut in customs duty which would have helped palm compete against South American soyaoil in the world’s largest oils importing country.

But palm oil dealers said they still expected prices to advance in coming weeks due to anticipated buying in big volumes by China and a drawdown in stocks.

People are convinced there’s some real demand coming for this market soon, a dealer said, explaining palm oil’s resilience despite disappointment over the Indian news.

I think we’ve seen the highest stock level at 1.6 million tons. Everyone knows that the exports for March must be better than February. And April must be better than March. And biofuel demand is there in the long term. So the market will not crash.

The benchmark third-month May crude palm oil contract on Bursa Malaysia Derivatives closed down three ringgit at 1,507 ringgit ($405.67) a ton. Its low for the day was 1,503 ringgit, while the high was 1,518.

May futures cracked 1,500 ringgit on Monday on optimism that India would cut tariffs for palm oil from Malaysia and Indonesia in its 2006 budget to be announced on Tuesday and put that product on par with South American soyaoil.

It’s bad enough no concessions were made for CPO and refined oil. But to hammer vanaspati is to close the door on whatever little room there is for RBD palm oil and RBD palm stearin in that sector, he added.

In the Malaysian market, aside from the benchmark contract, other traded months in crude palm oil ended down eight ringgit to up five ringgit.

A total of 11,706 lots of 25 tons changed hands, a shade lower than Monday’s volume of 11,946 lots.

Dealers said February estimates of palm oil exports, released on Tuesday, had little impact on the market.

Shipment of oil palm products for the current month grew only 1.25 per cent to 920,806 tons from the 909,448 tons tracked for January, said Societe Generale de Surveillance, a cargo surveyor followed by the market.

In physical trade of crude palm oil, buyers/sellers for March closed at 1,470/1,475 ringgit a ton in Malaysia’s southern and central regions. Trade was done at 1,475-1,470 ringgit. —Reuters