April 05, 2008	Saturday	Rabi-ul-Awwal 27, 1429

KUALA LUMPUR, April 4: Malaysian crude palm oil futures held firm on Friday despite a fall in vegetable oil markets as investors eyed demand from China and India.

Vegetable oils such as palm oil and soyoil, used in potato chips and biofuels, were dragged down by rising global stock levels and as investors unwound positions to raise cash.

But a well-timed move by India to scrap import duties on crude vegetable oils on Monday provided a much-needed respite for battered markets.

If crude palm prices remain within 3,000-3,300 ringgit for the next few weeks, the orders from China are going to flow in once spring ends in March, said a trading manager of a local commodities brokerage.

India already started making enquiries. The benchmark June contract on the Bursa Malaysia Derivatives Exchange settled up 7 ringgit at 3,297 ringgit ($1,034), holding on to gains of more than 8 per centthis year.

Other traded months were either slightly higher or lower while the May contract was unchanged. Overall trade dropped sharply to 3,982 lots of 25 tons each from the usual 10,000 lots.

But if the strike resumes after talks between the farmers and Fernandez fails to make headway, soyaoil and palm oil prices could spike up, analysts say.

He added palm oil prices may derive support from weaker output levels in Malaysia’s eastern states of Sabah and Sarawak as heavy rains are disrupting production. These states account for roughly 40 per cent of Malaysia’s total palm oil output.

But there has also been some talk that production might go up by double-digits. Then again it has been down in February, Ratnam said, referring to a drop of 13.78 per cent to 1,227,967 tons in that month.

Crop agency Malaysian Palm Oil Board will unveil March production, stocks and exports of palm oil on Thursday.

In Malaysia’s physical market, crude palm oil for April shipment in the southern region was quoted at 3,280/3,300 ringgit a ton. Trades were unquoted by the end of the trading session.

—Reuters