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China says 2001 summer grain output seen downSHANGHAI, July 17 (Reuters) - China's worst drought in more than a decadeis expected to cut summer grain output by 4.6 percent from last year to101.9 million tonnes in 2001, the State Statistical Bureau said in astatement on Tuesday.Analysts said that would cause China's total grains output to fall for athird consecutive year in 2001, but the decline would not be as huge aslast year as there were signs the drought might be over.In 2000, grains output fell nine percent year-on-year to 462.5 milliontonnes, the lowest since 1994, due to a drop in planting area andunfavourable weather."It is inevitable that our overall output will drop this year becausewe've seen falls in some rice crops and now summer grains," said analystBu Yibiao at the official State Cereals Information Centre in Beijing.The bureau said the summer output would fall because of a smaller plantedacreage and poor growing weather. It gave no breakdown of the crop.Winter wheat accounts for the majority of the summer grain crop, whichaccounts for more than 20 percent of China's annual grain production.The State Cereals Information Centre said in June China's winter wheatoutput was expected to fall 7.1 percent year on year to only 87 milliontonnes in 2001 due to a severe drought in key growing provinces in thenortheast.WORST DROUGHT OVERThe rest of the summer grains crop includes rapeseed and barley, analystssaid.In the past few months, China has been fighting its worst summer droughtin years, prompting cloud seeding in June."The dry weather did affect the corn and soybeans in its sprouting stage,"said Bu. "Now, the drought is more or less over, which benefits the autumncrops, but we still have to watch other factors like frost later in theyear."Analysts said they expected China's soybean output to to fall to 13-14million tonnes from 15 million tonnes and corn production to rise slightlyfrom last year's 106 million tonnes.Weak prices have dampened enthusiasm for growing grains, reflected in theStatistical Bureau's estimates earlier this year that total grain acreagein 2001 was expected to fall 1.7 percent year on year to 107 millionhectares.Soybean areas have fallen and the only bright spot is corn, which has seenplanting expand due to relatively better prices.The State Cereals centre estimated the soybean acreage in the key growingprovinces of Heilongjiang, Jilin, Inner Mongolia and Liaoning woulddecline between 4.5 percent and six percent this year to around 4.27million hectares.

Fuel proposal could boost soybeans

Malaysia palmoil ignores CBOT, speculators activeKUALA LUMPUR, July 17 (Reuters) - Malaysia's palm oil futures defiedChicago's downtrend and were mostly higher by midday on Tuesday onspeculative buying, traders said.The new benchmark third-month October contract rose 66 ringgit to 1,180ringgit ($310.53) per tonne, a morning high. Volume was at 1,298 lots."Everyone talked about speculative buying," said one trader in KualaLumpur.Some traders said the market was overbought and rising too fast despitethe absence of strong fundamentals. They pointed to the prospects of afurther increase in July palm oil output, seen at up to 1.03 milliontonnes versus 924,855 tonnes in June."There is talk that our market has fallen to the hands of a group ofpeople with vested interests...those who take advantage of (recent) pricerises for their own benefit," said one trader."This is not a fundamentally driven market."Chicago Board of Trade soy product futures tumbled on Monday, followingsoybeans down as improved weather forecasts for the U.S. Midwest pressuredprices.CBOT soymeal futures settled at $1 to $5.90 per tonne lower, with Augustdown the most at $171. Soyoil futures closed 0.20 to 0.52 of a cent perpound lower, with August off 0.32 of a cent at 18 cents/lb.Physical July crude palm oil for the southern and central regions wasquoted at 1,170 ringgit a tonne against bids of 1,160 ringgit. Deals weredone at 1,150 to 1,160 ringgit for both regions.August crude palm oil for the southern and central regions saw offers at1,180 ringgit against bids of 1,170. Deals were done at 1,160 for bothregions.Among refined products, July RBD palm oil was offered at $327.50 a tonneand August at $330.There were offers for July RBD olein at $347.50 and August at $350. JulyRBD palm stearin was offered at $240 and July palm fatty acid distillatewas offered at $200.

Palm Diesel Set To Change Country's Future Energy Scene

TNB Willing To Buy Biomass Energy For Up To 17 Sen Per Kwh

Alternative fuels cited to reduce grain oversupply in USAUSA, 7/16/2001 (Western Farm Press) - The strength of the American dollarrepresents a "permanent handicap" in exporting American commodities;therefore, the only new market left to develop for buying what Americaproduces is the domestic one.That was the consensus of California producers testifying before the HouseAgriculture Subcommittee on General Farm Commodities and Risk Managementin Fresno, Calif., recently.How to expand domestic markets elicited several suggestions, including onefrom prominent Five Points, Calif., producer John Diener, who farmsprocessing tomatoes, iceberg lettuce, almonds, grapes cotton and wheat onthe west side of the San Joaquin Valley.Loan rates and acreage limitation programs have failed to bring suppliesand demand into balance, he noted.U.S. commodity loan rates, he said, have proven to be price thresholds atwhich competing countries often add production to their base, making itmore difficult for U.S. commodity prices to rise above loan rates.Alternative fuel sources Diener said could be a reliable mechanism toreduce oversupplies of corn, wheat and soybeans in the U.S. He recommendsselling surplus commodities to the government, converting them toalternative fuels to be sold on the open market.Diener recommended investing more research into making alternative fuelseven more cost effective.Even though he suggests more research is needed, "current alternativefuels make sense and can be competitive against conventional energysources."Burning corn instead of natural gas at 50 cents per therm translates into$2.50 per bushel corn. Ethanol needs a subsidy only as long as crude oilprices are above $22 per barrel.One of the biggest obstacles is increasing production of ethanol or otheralternative fuels.Diener said many potential alternative fuel manufacturing sites exist inrural America in the form of abandoned sugar mills. These sites, hecontends, often have 50 percent of the capital costs of an alternativefuel producing facility in place. Federal rural developing funds could beused to convert these plants.Diener suggests that the CCC purchase five to 10 percent of surpluscommodity stocks per month when prices are below loan rates and convertthese surpluses into alternative fuels sold monthly on a bid basis torefiners needing it to blend into gasoline to meet federal clear airemission standards.Diener said American agriculture is at its "breaking point." One way tosurvive is to invest in the research to develop economically competitivealternative fuels that consume excess agricultural commodities and convertthat surplus into much-needed energy.

Government extends plan for oil palm replantingTuesday, July 17, 2001(The Star)- THE government has extended the closingdate for the oil palm replanting scheme 2001 by a month to July 31 toencourage wider participation from private oil palm plantations andsmallholders, Deputy Primary Industries Minister Datuk Anifah Aman said."We are confident of achieving the target of replanting 200,000ha of oldoil palm plantation as we have received applications to replant 150,045haas at July 10," he said in a press conference at the ministry yesterday.The scheme was launched on March 8.Under the scheme, which was given an allocation of RM200mil by theGovernment, an incentive of RM1,000 would be given for each hectare of oilpalm trees above 25 years which were replanted with new high-yieldingclones.An incentive of RM1,100 per ha would be given if the oil palm plantationwas replanted with rubber trees.Anifah said the replanting scheme would reduce the country's crude palmoil (CPO) production by 600,000 tonnes and that CPO price last year haddipped by 29.9% because of oversupply in the world market."We are confident that the removal of excess supply will help improve andstabilise the price of CPO in the world market," he said.He also said that the world demand for CPO would have increasedsignificantly by the time the replanted plantations mature in three orfour years."We expect the higher demand due to population growth, tapping of newmarkets and discovery of new uses for CPO," he said.Anifah said 57% of the applications for the replanting scheme came fromprivate oil palm plantations, 29% from government agencies operationplantations and 14% from individual smallholders.

Indonesia increases crude palm oil exports to ChinaJAKARTA, July 10 Asia Pulse - Indonesia is planning to increase its shareof the crude palm oil market in China to 45 per cent from 30 per cent bythe end of this year, an official said.Rosediana Soeharto, an expert staff of the Industry and Trade Minister,said China imported 1.4 million tons of CPO last year.In the first half of this year, China imported around 700,000 tons of thatcommodity. Malaysia accounted for 65 per cent and Indoensia for 30 percent of the supply to China.Rosediana said the industry and trade ministry will send a team to promoteIndonesia's CPO exports to China.She said in cooperation with Malaysia, the world's largest producer ofCPO, Indonesia plans to launch promotion campaign to increase CPO marketin the United States.Malaysia already launched world wide promotion campaigns including in theUnited States last month.Rosediana said CPO is not popular in the United States as the U.S.government seeks to restrict CPO import. The United States prefers soybeanoil.Based on data from the Indonesian cooking oil association, Indonesiaexported 680,000 tons of CPO in the first 5 months of this year. Lastyear, Indonesia's CPO exports totaled 1.9 million tons, up from 723,000tons in 1999.

U.S. Sunflower Briefs: Crop doing well, Pringles praises NuSun oilUSA, 7/16/2001(Soyatech)CROP CONDITIONS: Soil moisture is becoming a common topic in many areas ofthe sunflower producing region. Parts of Kansas and Colorado haveexperienced exceptionally hot temperatures requiring a high water use. Thesunflower crop is generally making good progress with the warmtemperatures and plant stage varies from emergence to bloom. Pest problemsare minimal at this time. The Thistle caterpillar can be found in somesunflower fields and treatment is advised when defoliation reaches 25percent. Stem weevils are abundant in parts of the High Plains.

Austral strongly advocates ePOMEXMonday, July 16, 2001(The Star) - AUSTRAL Enterprises Bhd, one of the topnine major plantation companies in Malaysia, strongly advocates theformation of the Malaysian Palm Oil Exchange (ePOMEX), the world's firstelectronic exchange for trading oil palm products for physical delivery.Austral group managing director Dr Radzuan Abdul Rahman said: "We aredefinitely among the earliest shareholders and a firm believer in theexchange."Austral has taken up a 5% stake in Ecomex Palm Oil (M) Sdn Bhd (ePOM), thecompany which undertakes the implementation and operation of ePOMEX.Apart from the two ePOM anchor shareholders--Heitech Padu Bhd and NewZealand-based Global Ecomex Ltd--Austral is also optimistic that ePOMEXwill received strong backing from producers and positive support from thegovernment."This timely and solid electronic exchange will pave way for a moreefficient and aggressive market," Radzuan told Star Business in KualaLumpur.Presently, Heitech Padu has an 18% stake in ePOM, followed by GlobalEcomex (19%), IOI Corp (3.9%), Felda (10%), Austral (5%) and otherindividuals (13%)."We want ePOMEX to attract a well-balanced mix representing major playersin the industry, namely the producers, refiners, millers, oleochemicalcompanies and traders."To transform ePOMEX into an almost perfect electronic exchange, we need afull representation of shareholders and seatholders from theseindustries," added Radzuan. (One has to be a seatholder in order to tradeon ePOMEX.)Commenting on Austral's involvement in ePOMEX, he said the company may beviewed as a "seller" in the local market since Austral did not have arefining capability at this time.Personally, he views that sellers would benefit from the level playingfield available in an electronic marketplace."Perhaps more importantly, Austral's small but soon-to-be lucrativeinvestment in ePOMEX is our way of encouraging the development of thelocal palm oil industry, a vital engine for the economic growth."At the same time, Radzuan said, "it is also crucial for large independentrefiners to actively take up a role in ePOMEX as the exchange also rideson other opportunities as well."He believed that ePomex could already have a smooth first year ofoperation with Felda, the single largest producer of crude palm oil, beingone of ePOMEX shareholders and "perhaps getting at least five plantationgroups, refiners and traders."The top nine plantation companies in the country are IOI Corp, Sime Darby,Tradewinds, Golden Hope, Boustead, KL Kepong, Austral, Perlis PlantationsBhd and Kumpulan Guthrie.Meanwhile, ePOM chief executive officer Akit Sebli said: "ePOMEX expectsto trade between 4% and 5% of the total CPO production in Malaysia orabout 550,000 tonnes in the first year."At the same time, ePOMEX is also targeting to trade up to 25% of the totalCPO production over the next four years.The electronic exchange is slated to be launched in late August, beginningwith the physical trading of the CPO contract.Akit also mentioned that as immediately as convenient, ePOMEX planned tooffer its trading services to the overseas players as well.Asked on the current drawbacks of the traditional system of trading palmoil products, Radzuan said "market reach is dependent upon and largelydetermined by prior experiences with buyers and sellers over a longperiod."Traditionally, trading was often limited to the personal contacts ofmarketing personnel, he said, adding that this mechanism posed physicaldifficulties of contacting and negotiating with a significant segment ofthe market and was often restrictive.Radzuan said reliance on the futures market as a pricing benchmark alsoconfined trading within the Malaysia Derivatives Exchange's hours.The 24-hour trading on ePOMEX, however, brings together both buyers andsellers representing millers, refiners, palm kernel crushers, oleochemicalcompanies and traders in a single electronic marketplace.Citing on the trading application, he said buyers and sellers couldeffectively utilised the tools they needed to conduct either acomprehensive auction or a negotiated trade for their offers to sell orrequests to buy.As the exchange grows, other services ancillary to the actual trade willbe incorporated to further enhance the efficiency of the exchange.

CPO may be in for downward correctionMonday, July 16, 2001(The Star)- CRUDE PALM OIL (CPO) futures prices onthe Malaysia Derivatives Exchange (MDEX) skyrocketed last week as tradersscrambled in panic buying and forced prices briefly to the RM1,200 pertonne level the highest seen since April 25 last year.China's decision on palm oil import quota for the rest of this year at700,000 tonnes and sharply higher soyoil prices sparked the bullish rallyand caused many local refiners and speculative shorts to square-offearlier positions.The market has anticipated and reacted to the positive news from China,and the big question confronting traders this week is, would the bullishrally continue or would the market decide to sell-on-facts now that theChina factor has been discounted?

Foreign labour in oil palm estates a necessity: MPOASaturday, July 14, 2001(The Star)- THE use of foreign labour in oil palmestates is no more one of choice but one of necessity, according to theMalaysian Palm Oil Association (MPOA).Thus, the association wants the Budget 2002 to address the real costs ofusing foreign labour.MPOA said this in its memorandum for the Budget 2002 dialogue.The MPOA proposals also covered three other areas--the palm oil industryspecifically, the plantation industry in general and taxation.MPOA said that although the matters it submitted for consideration werelargely a restatement and reiteration of its stand in the previous year,the overall picture had now come into more clear focus."There is now more light than heat on the various issues affecting theindustry. It would be useful to relook at some of the pertinent issuesagain in the clear light of the latest developments," the associationsaid."Malaysia's economy used to be largely agrarian. In recent yearsagriculture has taken a back seat with the nation successfully pursuing anindustrialisation policy," it said. "The plantation sector however remainsa major contributor to the gross domestic product, but its share isdwindling vis-a-vis manufacturing."