Thursday August 5, 2004 - RISING freight rates are threatening to throttlea pick-up in demand for Asian palm oil, as world crude oil prices soar torecord highs, said industry officials.

Shipping costs for palm oil from Malaysia and Indonesia, the world’slargest exporters, jumped 20% over the last two weeks as crude oil pricestouched 21-year peaks, freight brokers said in Kuala Lumpur yesterday.

It’s not that there aren’t enough ships to carry palm oil as the rumourgoes a cargo agent in Kuala Lumpur said. We can find the freight space ifpeople can find the money to pay.

Freight rates for Malaysian and Indonesian palm oil bound to China, India,Pakistan, Rotterdam, Red Sea ports and the Mediterranean were quoted US$2to US$5 a tonne higher this week from a week ago.

India is the world's largest buyer of edible oils, followed by China.Purchases by the two major consumers dropped over the last two months asChina grappled with a credit squeeze while India was exhausting a bumpersupply of domestic oils from last year.

Only in the last couple of weeks, we’ve seen the Indians and Chinese readyto buy again in big quantities, said a palm oil exporter.

So, the crude oil rally could not have come at a worse time.

US light crude hit a record high of US$44.25 in Asia yesterday, extendinga rally since early July . Reuters