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BRUSSELS, Nov 7 (Reuters) - The European Commission unveiled plans onWednesday for fostering biofuel production in Europe in a bid to ensurethey account for two percent of all fuels by 2005.Biofuels are combustible fuels that can be used pure or blended withconventional fuels and are obtained by processing plant oils, sugarbeet,cereals and organic waste materials.The Commission said it had adopted an action plan that aimed at atarget of 20 percent inclusion of biofuels by 2020.European Union Transport Commissioner Loyola de Palacio said the planswould reduce the transport market's dependance on oil-based fuels."This coherent action plan for an alternative fuel strategy fortransport will tackle this over dependance, which is a significant sourceof environmental and supply cornerns for the European Union," she said ina statement.The Commission proposed a two percent minimum level of biofuels as aproportion of all fuels by 2005 and reaching 5.75 percent of all fuelssold by 2010.EU Tax Commissioner Frits Blkestein said a second proposal adopted bythe Commission offers member states the choice of reducing tax rates onpure or blended biofuels used as heating or motor fuel, would act as "animportant incentive for economic operators to turn towards products whichpromote sustainable development".The promotion of biofuel production will also impact the EU's farmingsector, Farm Commissioner Franz Fischler said.He said it could "offer new sources of income" and "become a concretedemonstration of a sustainable, multifunctional agriculture."

KUALA LUMPUR, Nov 6 - Partial data available indicate palm output wassustained at a high plateau almost throughout the whole month of October.Our preliminary estimate shows CPO production rose around 50,000 tonnes or4.5 percent to 1.15 million tonnes.The crop was higher in both East Malaysia and Peninsular Malaysia. Theweather was wet and favoured both crop development and ripening. However,forecast of continued wet weather right up to December is likely todisrupt and delay the felling of old palms for replanting. Actualreplanting carried out is now expected to fall far short of the 185,000hectares which had been registered.On an annual basis, CPO production shrank an estimated 2.8 percent orworse than the contraction of 0.9 percent in September. We now estimatethe whole year's production to reach 11.65 million tonnes and 7.5 percenthigher than last year's output of 10.84 million tonnes.Palm oil offtake also turned out to be somewhat better than previousexpectations. Exports rebounded strongly to an estimated 885,000 tonnes inOctober from around 650,000 tonnes in the preceding month. The recoveryreflected chiefly a big increase of nearly 100,000 tonnes to 190,000tonnes in shipments to Europe including Russia.India and Pakistan respectively took some 75,000 tonnes and 65,000tonnes more after having reduced their offtake drastically in September.China remained a good buyer when it took an estimated 155,000 tonnes or15,000 tonnes more than a month earlier. However, contrary to expectationsand market talk, there were no increased offtake by the West Asian/MiddleEast countries ahead of Ramadan.Shipments to ASEAN countries also remained poor. It is significant tonote combined September-October exports at an estimated 1.515 milliontonnes represent a sharp contraction of 280,000 tonnes or 15.6 percentfrom the same period last year. We also project export performance in thenext 2-3 months to continue to register negative growth.Even though price of edible oils and fats are low, consumption hasbeen adversely impacted by the global economic slowdown. This is mostevident in developing countries where unemployment and under-employmentare rising and incomes have dropped sharply. Even the price of crude oilhas dropped to a two-year low of $20.Palm oil stocks registered another substantial buildup at end October.Estimated at 1.38 million tonnes, stocks were up 165,000 tonnes, bringingthe buildup over two months to nearly half a million tonnes. By the end ofthis month we may see stocks reaching 1.4 million tonnes. This would be90,000 tonnes higher than what we had projected early last month.CPO futures had fallen sharply by 450 ringgit from 1,315 ringgit onAugust 8 to 861 ringgit on October 8. Thereafter prices started torecover, with limited success during the second to third week but moreconfidently from the fourth week onward. The turnaround may have beentriggered by India's lowering of tariff values on palm oil on October 9but the recovery only assumed a sustained course when the market becameconfident that exports in October had indeed recovered strongly.Market confidence was further boosted when the Indian governmentfinally cut the import duty on CPO from 75 percent to 65 percent onNovember 1, a move that trimmed off the big advantage that imported SBOhad enjoyed over palm oil in the Indian market since March 1.Yesterday, the January CPO futures contract extended its run-up bysettling at 1,074 ringgit or 44 ringgit higher. This brought cumulativegains since October 22 to 158 ringgit. SBO prices also advanced whilesunoil and canola oil remained firm because of increasingly strongfundamentals.However, given the gloomy global economic outlook, Malaysian palm oilproducers-exporters must intensify their efforts to reduce stocks to morecomfortable levels in the coming months. Malaysia also faces even keenercompetition from Indonesia, morem so when its rupiah had lost more than 13percent of its value against the dollar in the past six weeks.Our next report will be released this Friday ahead of MPOB report onMonday, November 12.(The opinions expressed in this article represent the views of theauthor only. They should not be seen as necessarily reflecting the viewsof Reuters)

KUALA LUMPUR, Nov 2 (Reuters) - Malaysian palm oil traders said on Fridaythey expected the government to announce by next week a new quota forduty-free exports of crude palm oil (CPO) after India, the biggest buyer,cut import tariffs.A one million tonne allocation for this year was exhausted in Octoberand a new quota was needed if Malaysia was to shield its market share inIndia from arch-rival Indonesia, they said."I expect the government to announce a CPO export quota by next week,otherwise the Indonesians are going to go for the kill," said a trader ata Kuala Lumpur palm oil brokerage.Malaysia, the world's number one palm oil producer and refiner,traditionally slaps a high export duty on CPO to encourage the sale of oilin its refined form.Indonesia, the second largest producer, by contrast exports most of itsoil raw due to its limited refining capacity.Malaysia's problems began two years ago when India decided to raiseimport duties on refined edible oils such as palm olein, which it buysmostly from Kuala Lumpur, to protect its own oilseed growers from foreigncompetition.The move led to a windfall for Indonesia's exporters of CPO, taxedlower than olein on arrival in India. Not wanting to be outdone, Malaysiahas since allowed duty-free CPO exports not amounting to more than amillion tonnes a year.

MUMBAI, Nov. 2. EDIBLE oil arrivals into the country slowed down furtherin October.According to a quick estimate prepared by Oilmandi.com, a vertical portalof the vegetable oil industry, imports in October aggregated 2.68 lakhtonnes (lt), down from 3.97 lt during September and peak of 6.54 lt inAugust.Broadly,October arrivals comprised 1.05 lt of degummed soyabean oil,74,000 tonnes of crude palm oil and 70,400 tonnes of refined palmolein.Crude sunflower oil accounted for 13,800 tonnes and rapeseed oil 4,000tonnes. This takes the aggregate import during oil year November2000-October 2001 to a new high of 48.13 lt, up from 44.95 lt of theprevious oil year.The fiscal instruments of the Government - high customs duties, fixing oftariff values - have helped contain growth in import volumes, especiallyin the context of sharp decline in domestic oil production during theyear.Due to its low bound rate of duty (45 per cent), soyabean oil has becomethe major gainer. In 2000-01, import volumes of soyaoil doubled to 13.9lt. On the other hand, crude palm oil imports increased by 70 per cent to14.1 lt during the year, despite bearing a high rate of 75 per centcustoms duty after the last Union Budget.

(Soyatech.com)11/6/2001 - Go all out to seek non-traditional palm oilmarkets and strengthen existing ones. Pushing the final frontier in thisrespect underscores Primary Industries Minister Datuk Seri Dr Lim KengYaik’s agenda. Lim is still fired up about Malaysia’s golden crop. He justwants to ensure the industry does not wait for the mountain to come to itsfore. Rather, Lim wants the industry to go to the mountain - not only tostay afloat but also to lead, whenever possible. What is more, the recentBudget 2002 has given various perks to the industry. Undercutting,unrealistic quotas, tough tariff barriers and unpredictable governmentpolicies are making it tougher for the trade. However, this does not meanthe industry retreats into "dinosaurism".In short, Lim said it was a different ballgame in the oils and fats world.Are Malaysian businessmen in the palm oil trade not aggressive enough? Tohim, they have to give their best shot now, considering the current globalscenario and the competitive market. "We must be proactive in assessingand preparing for the future and should not take things for granted," Limemphasises.The world will be short of energy one day, maybe in 30 years or 50 yearsfrom now because fossil fuel is depleting fast and is not renewable. Butthis is definitely not the same case for palm oil which is renewable andedible – albeit the long replanting period of more than 20 years.Notwithstanding this, one should not take things for granted. Lim saidthere are several learning curves since the American Soybean Association(ASA) saga of the mid-eighties. Lim said drastic policy changes in keymarkets can affect our palm oil, i.e. the high import duties by India andChina’s shift from oil imports to oilseeds import, both which are at ourexpense.Another concern is that a similar trend could happen again in the futurein some of our non-traditional markets, said Lim, indicating that thelesson is very clear. India remains the single largest market for our palmoil, followed by EU, China, Pakistan and Egypt. The total palm oil exportsto these countries accounted for about 61.5% of Malaysia’s total palm oilexports for the past two years. This shows our palm oil export continuesto be highly dependent on these markets and we are equally vulnerable ifthere was a change of consumption pattern, Lim said.Thus, the lack of market diversity warrants serious consideration as anysignificant shortfall in imports by any one of these countries can dampenthe prospects for the Malaysian palm oil industry. Outlining thestrategies for a better foothold in the industry, Lim said refiners shouldcapitalise on the current low palm oil price by promoting more value-addedproducts such as double fractionated olein to expand further into theliquid oil markets such as West Asia and the Far East.The government has abolished the 5% export duty on processed palm oil incategories II, and I that include crude olein and bleached palm oil,beginning Sept 1 this year. The industry must take advantage of thisabolition to expand into new and niche markets for those products. To becompetitive in the international market, the industry has to work doublyhard to rise to the occasion, more so when our nearest competitor soybean,has been working hard to improve its yield and costs."We cannot rest on our laurels for, unless we can match its (soybean’s)productivity, it is a matter of time before it outbids our cost," Limcautioned. It is imperative that the industry goes back to basics.Issues regarding increasing cost of production, improving and developingnew products need to be revisited to sustain the viability andcompetitiveness. For palm oil refiners, there is a need to modernise andupgrade their refineries to maintain the competitive edge, to avoid thedinosaur syndrome.Elaborating on the various key Malaysian markets, Lim said the localindustry could not ignore the situation in Pakistan. Each year, Pakistanimports no less than one million tonnes, most of which is from Malaysia.With the Sept 11 terrorist attack in New York, there is likelihood thatimports of palm oil into Pakistan will be disrupted greatly, impactingsignificantly on our industry. "We can expect disruptions to the edibleoil logistics, especially shipping, not only in Pakistan, but in nearbymarkets, India and West Asia," Lim said. He added that many shipping lineswere loading heavy premiums on routes to Pakistan and India.Understandably so, but the shipping lines must also realise they too havea responsibility in times like this. If the premium is unreasonable, itwill compel the government to look for alternative arrangements. In anytrade, it must be a win-win situation for all parties. But there is stilla silver lining albeit the uncertainties. This concerns the anticipatedadmission of China into the World Trade Organisation (WTO) at theministerial meeting in Doha, Qatar, this month."We can expect our palm oil exports to China to register an increase,"said Lim.China’s WTO membership is certain by early next year, starting a processthat will transform its economy in ways that are already causinganticipation and anxiety among those who expect to be affected.Duties on imported agricultural products into China are to be reduced overtime to 17% from an average of 22% now, and the reduction will be evengreater than some American farm produce. Import quotas will be relaxed.China will not only allocate more quotas for palm oil, but will alsoinform earlier. It will phase out the quota after five years of membershipin the WTO.This will be a significant development for our palm oil industry that hasmade substantial contribution to Malaysia’s economic recovery during thefinancial crisis of 1997 and 1998. However, towards the end of 2000, theindustry faced a downturn and the price of palm oil touched bottom earlythis year. This was due to increased production, depressed export demandand huge stock build-up.With prices nearing the cost of production, the ministry has undertaken anumber of strategic policy decisions to reduce stocks and boost price.These include the burning of CPO as fuel oil at Tenaga Nasional Bhd powerstations and other industrial uses, the granting of special incentives toexpedite replanting of old palms and reducing the use of fertilisers toreduce the crop yield.Palm oil’s multiple uses include the production of methyl esters,carotenes and vitamin E. The methyl esters can be used for dieselsubstitutes and oleo chemical feedstock. This will provide a good safetynet because palm oil is a renewable energy resource. All said and done,Lim is still upbeat that palm oil will ride out the current storm as theindustry has proven in the past.

KUALA LUMPUR, Nov 5 (Bernama) -- Malaysia and Indonesia are exploring thepossibility of forming an ASEAN committee on commodities, said PrimaryIndustries Minister Datuk Seri Dr Lim Keng Yaik.

KUALA LUMPUR, Nov 7 (Reuters) - Palm oil shipments to Pakistan are set totriple in November due to U.N.-organised purchases to help Afghan refugeesand ahead of the Muslim fasting month of Ramadan, traders said onWednesday.Pakistan's palm oil imports, which may reach 220,000 tonnes this month,will be channeled to refugees fleeing U.S.-led strikes in neighbouringAfghanistan and to meet domestic demand.Pakistan normally buys up to 80,000 tonnes of palm oil a month from theworld's largest producers, Malaysia and Indonesia, but local consumptionis set to jump to 110,000 tonnes during the Ramadan."You have almost 900,000 refugees in Lahore and Peshawar. The U.N. orthe U.S. don't want to starve these people," said one trader in KualaLumpur."The U.N. basically gives out local tenders to local traders inPakistan," said the trader, adding the oil was purchased at $325-330 C&F atonne.The U.S.-led military campaign in Afghanistan has put thousands ofrefugees on the move and stoked fighting on the front lines betweenTaliban forces and the opposition Northern Alliance.The United Nations, which fears up to 1.5 million Afghans could flee,has called for surrounding states -- Pakistan, Iran, Tajikistan,Turkmenistan and Uzbekistan -- to admit people trying to escape starvationand the U.S.-led bombing campaign.Traders said Malaysia was expected to ship some 160,000 tonnes of RBDpalm olein and RBD palm oil to Pakistan in November. Around 120,000 tonnesof oil had been booked so far.Shipments from Indonesia were set to reach 60,000 tonnes, in which40,000 tonnes had been booked, they said.

06 November 2001 (Business Times) - The Government may consider continuingthe RM100 million aid to rubber smallholders to help with their dailyexpenses next year if the situation warrants it, National Economic ActionCouncil (NEAC) executive chairman Datuk Mustapa Mohamed.

02 November 2001 (Business Times) - There is a big potential for the localfarming community to discover new wealth as Malaysia further develops itsagriculture sector.

05 November 2001 (Business Times) - DRB-HICOM Bhd hopes to clinch theUS$180 million (US$1 = RM3.80) railway project in Bangladesh by this year,officials of the company said.The company will have an advantage over competing bids if the BangladeshGovernment opts to use financing arranged by the Malaysian company.“However, nothing is certain until we sign the contract,” said a DRB-HICOMofficial.The official said DRB-HICOM would “almost certainly” get the contract tobuild the 110km railway if Bangladesh Government chooses the financingpackage.“If it decides to use its own funding, then we have the same chance asother companies. We are doing our best to get the project, and theMalaysian Government is very helpful while the Bangladesh Government isvery receptive to Malaysia... it views us positively,” the spokesman said.It was reported in July that the local automotive and transport giant wasclose to landing its maiden rail development project abroad and is in theprocess of finalising details of the project.“It is likely to be joint-development involving DRB-HICOM and someBangladesh partners.“This is the normal practice for infrastructure projects in the country,”a DRB-HICOM official had told Business Times.When contacted last Friday, the official said that the company is waitingfor indication from the Bangladesh Government. “Hopefully, it willannounce the winners by this year.”DRB-HICOM’s participation in railway development became more evident afterthe Government announced earlier this year that a RM12 billion projectwill be undertaken to double-track the entire peninsula’s rail network.The company has come to be seen as a front-runner to play a key role.The project is divided into two packages and is being offered to companiesfrom India and China on a barter deal basis involving payment in palm oilfor the work contracted.The northern stretch has been awarded to India, while the southern grid isto be developed by Chinese firms.Apart from having preliminary talks with India’s Ircon International Ltdto offer its services for the northern stretch of the rail project,DRB-HICOM recently confirmed its participation as a sub-contractor for thelink between Seremban and Johor Baru.DRB-HICOM will work with head contractor — China Railway, for the RM6billion double-track rail link.DRB-HICOM is also involved in the RM4.2 billion construction of the 170kmdouble-tracked Rawang-Ipoh stretch, which will be completed by June 2004.Its share is said to be worth RM2.6 billion, with work on the first phaseprogressing as scheduled.

01 November 2001 (Business Times) - LOCAL exporters are down to a guessinggame when it comes to estimating their costs of sending goods to Pakistan,India and West Asia.This is due to the current undisclosed sum of insurance premiums to bepaid by the charter parties following the September 11 terrorist attackson the US.“The new terms require us to call the insurers three weeks before a voyageand find out the actual insurance premium.”“To make matters worse, 48 hours before reaching the port of call, anotherclarification on whether the insurance premium is still the same isrequired,” one exporter told Business Times in Kuala Lumpur.The London-based War Risk Rating Committee sets the insurance rates andpremiums for vessels plying the trade routes.Sources said the committee is having difficulty to determine the actualcharges for ships headed for Pakistan, India and West Asia. Among the moreprominent vessel insurers are Lloyds of London and P&I Club.The previous rate of 0.025 per cent of the hull value of the vessel wasincreased to 0.05 per cent, a war risk surcharge to all destinations, andstands the same for any vessels plying all other waters.Sources said the problem is the undisclosed amount placed on vesselsplying to India, Pakistan and West Asia.The undisclosed insurance premium leaves the charterers in a daze as tothe actual amount of insurance charges to be placed on the other party.“The only solution is for the charterer to assume a figure and hope thatthe figure does not stray above the amount placed,” one exporter said.The current problem of undislosed premiums was brought up with the PrimaryIndustries Minister Datuk Seri Dr Lim Keng Yaik by the local insurancecompanies, shippers and oil palm exporters.The representatives from the various industries asked assistance from theGovernment, to place a deposit for the companies insuring the vessels tothe war risk regions.“It is not the case where the waters are unsafe to be travelled on, butmore of a situation where the large insurers are attempting to make back aUS$70 billion ( US$1 = RM3.80) loss from the crashing of the World TradeCentre in New York, and the four aircraft lost in the process,” one sourcesaid.Local insurance brokers feel that the placing of the undisclosed war risksurcharge is taking things a step too far. The local brokers feel that theimposition of such a surcharge is uncalled for as the actual attacks arein Afghanistan which has no sea boundary or ports.The meeting with the minister was only to inform the Government of theproblems, a solution is yet to be decided on.The minister, it seems, will call for another meeting sometime soon todecide on the possible assistance which can be offered by the localGovernment.

02 November 2001 (Business Times)