10/6/2004 FINANCIAL EXPRESS - Good soyabean harvest in the US is likely tohave a dampening impact on the crude palm oil (CPO) prices in theMalaysian market. The CPO prices are likely to drop by about 12% toRM1,300 per tonne from the current level of RM 1,450 a tonne by the firstquarter of 2005, said Dr James Fry, managing director of LMC InternationalLtd. Presenting a paper at the Oils and Fats International Congress(OFIC-2004)

Dr. Fry said, "Good weather condition in the US is expected to last forthe next three to four months leading to good soyabean harvest."

"Good US and EU oilseeds harvests are weighing down upon prices. Alowersoymeal-maize ratio is raising soymeal use in feed which in turn isboosting the output of co-product soyabean oil. Consequently, vegetableoil supply is starting to outstrip demand growth. This is expected to pulldown US CPO prices by another 10% by year-end. The soy oil premium overCPO will revert to a more "normal" US $100-110 per tonne," he indicated.

Excerpts from the paper:

All oilseeds prices recently have all been above their long run trends.Soybean and coconut oils, for different reasons, are furthest above theirtrends. Soyabean prices were boosted by poor 2003-04 crop and the Indiantariff system. CPO prices are around 20% above their long run trends, hesaid. Malaysian palm oil stocks are running well ahead of their levels 12months earlier. As the soybean premium over CPO shrinks, Indian soy oilimports should increase at the expense of its palm imports. If Malaysianproducers have one magic wish, it must be the ending of Indian importtariff rate discrimination to favour soy oil over palm oil, Thanks to thevarious deficiency payments today, US soyabean farmers are protected fromlow world prices. As a result, US soyabean plantings show little responseto changes in wold soyabean prices. Instead, the main determinant of USsoyabean areas in the ratio of the floor price of soyabean to that ofmaize.