KUALA LUMPUR, Dec 29 (Bernama) -- Prices of Malaysia's major non-oilprimary commodities -- crude palm oil, rubber and tin -- are likely tostay firm next year, based on their current performance of late.

The basics are simple -- demand for them is strong against a backdrop of ashortage in supply.

The outlook for CPO is the brightest amidst tight supplies and lowerstocks of major oils and fats. The price for CPO, currently at a nearseven-month high, is anticipated to be firmer in 2004, the editor-in-chiefof the Hamburg-based newsletter, Oil World, Thomas Mielke, told anindustry conference in Kuala Lumpur recently.

The benchmark CPO futures price of March 2004 on the Malaysian DerivativesExchange is currently standing at RM1,757 per tonne.

Mielke also said that with expectations that world palm oil productionwould be lower between October 2003 and September 2004, palm oil mayperform better than its rival, soy oil, in terms of prices next year. Thebroad price discount of palm oil to soy oil, which has pushed up demandfor palm oil, is likely fall to US$60 a tonne from US$100 currently.

Prices of Malaysian palm oil had increased by 17 percent or RM200 (US$53)per tonne on September in line with a similar rally for soy oil futures onthe Chicago Board of Trade.

Higher demand for the local palm oil could also be expected as the globaledible oil imports are expected to touch 5.53 million tonnes duringSeptember 2003 to October 2004, said Mielke.

The Minister of Primary Industries, Datuk Seri Dr Lim Keng Yaik, did saythat local palm oil prices can sustain at RM1,850 per tonne, at leastuntil the middle of 2004. The forecast was based on the lower currentlocal palm oil price by US$100 (RM350) a tonne compared to soy oil price.

Dr Lim said demand seemed to be on the increase from overseas buyers,especially from China and India.

As for rubber, the market is expected to stay bullish with pricescontinuing to move up further on unabated demand, especially from China,and the establishment of the International Tripartite Rubber Corporation(ITRC).

Currently, the average price of January International RSS One is 472.50sen per kg while tyre grade SMR 20 is at 473.50 sen per kg due to thetight supply situation and the wet weather, which hinders tapping andproduction.

ITRC, set up by the world's top rubber producers of Malaysia, Thailand andIndonesia, is aimed at strengthening the price of the commodity as well asensuring remunerative pricing for producers and fair pricing forconsumers.

Dealers said the price of natural rubber is also estimated to climb toUS$1.5 kg by early next year compared with around US$1.15 at present.

The Association of Rubber Companies said this bullish forecast is due tothe fact that industrialised countries are expected to run out of stockssoon.

As for tin, the price on the Kuala Lumpur Tin Market is expected to hoveraround US$5,800 and US$6,500 per tonne next year as foreign demand for themetal is expected to continue amidst tight global supplies.

Dealers said other factors that could lift the tin price increased globalconsumption for tin, which is forecast to rise to 293,000 tonnes this yearand 300,000 tonnes in 2004.

World tin consumption will be stimulated by the improving US economy andsome recovery in the electronics sector, according to a UK-based researchorganisation, Tin Technology.

China's tin consumption is also expected to grow from 64,000 tonnes thisyear to 69,000 tonnes next year due to rising local demand and theincreased transfer of manufacturing operations to that country.

-- BERNAMA