KUALA LUMPUR (April 16 2003) : European palm oil consumers arewell-covered through September, putting more pressure on main producerMalaysia already shaken by poor exports, traders said on Tuesday.

The European Union is Malaysia's third-largest buyer in 2002, accountingfor nearly 14 percent of the country's palm oil exports.

European consumers also purchase palm oil from the world's second-largestproducer Indonesia."

"I am afraid that limited demand from Europe is the main reason whyexports are poor," one freight broker in Kuala Lumpur said.

Cargo surveyor ITS said Malaysia's palm oil exports for April 1-15 stoodat 465,384 tonnes against 511,426 tonnes for March 1-15, raising fear thatfalling exports would lead to a build-up in stocks in coming months.

Traders in Europe said consumers had bought heavily in the months leadingup to the war in Iraq because of fear that shipping could be delayed.

Palm oil's hefty discount to rival soyaoil and rapeseed had also triggeredcovering by European buyers.

"Some of them had covered a little too much and are looking to sell back,"said a German palm oil broker.

GLUM OUTLOOK: Palm oil currently commands a discount of $120 a tonne tosoyaoil.

In Rotterdam, palm oil stocks stood at 57,642 tonnes as of Monday, up3,974 tonnes.

"The cover in Europe is good, I do not believe there are many playersshort at the moment," said one Dutch broker, adding that buying interestcould pick up when the summer is over.

"But at the moment buying interest is light as prices for palm oil aresteadily moving downward," he added.

Malaysia's palm oil futures have fallen by more than 12 percent so farthis year on the back of rising output and exports fall short ofexpectations.

Influential private forecaster Ivan Wong had estimated Malaysia's palm oilexports at 925,000-930,000 tonnes in April, down from the official 961,570tonnes in March.

By midday on Tuesday, the benchmark third-month June contract fell eightringgit to 1,391 ringgit ($366.05) a tonne in Malaysia's crude palm oilfutures.

Some chartists pegged key support levels at 1,370 and 1,360 ringgit,adding that the downtrend was intact.

Key resistance was seen at 1,411 ringgit.

South-east Asian traders said India had booked nearly half a milliontonnes of palm oil for April shipments, but it was not clear if theworld's largest edible oil consumer would take the whole amount.

India, which buys palm oil from Malaysia and Indonesia, could delay someshipments because of prospects of more declines in palm oil prices, theysaid.

"Last time people thought that exports to India would total 450,000 tonnesin March. But the actual amount only reached 385,000 tonnes," said onetrader.

"So, I am not sure whether India will take a total of 500,000 tonnes thismonth. Just let's wait and see," he added.-Reuters