KUALA LUMPUR, April 8 (Reuters) - Malaysian palm oil flew deep intonegative territory on Tuesday as players disagreed over the potential forthe market's exports under Iraq's food-for-oil programme, which bolsteredprices just a day ago.Talk on Monday that palm oil may benefit immensely from a race to getedible oil supplies into Iraq saw palm oil's key June contract surging 28ringgit and other futures contracts posting double-digit gains.But disagreement on Tuesday on what exactly the United Nationsprogramme meant for palm oil sales hammered the June contract down by 36ringgit to a close of 1,444 ($380) a tonne."If you ask me, people are just confused," said a trader. "It doesn'tmake sense for a market to go up so much a day before and fall this much aday later."Several palm oil traders told Reuters over the weekend that more than400,000 tonnes of palm-based vegetable ghee and 100,000 tonnes of palm oilwere poised to enter Iraq before May 12 as stipulated by a U.N. SecurityCouncil resolution.Others disputed the volume, saying Iraq's annual demand of vegetableghee was only 360,000 tonnes. "We are thus wondering how they could takeso much within the next few weeks," said one.But dealers specialising in sales to the Middle East said an untoldnumber of shipments to Iraq contracted by the United Nations had yet to bedelivered over the 12 years that Baghdad has been under sanctions.They said the world body was anxious now to get those contractsunderway."We know of contracts that were not honoured because prices weren'tright. Those deals may have to be renegotiated at today's prices," said anexport official at an oils brokerage in Kuala Lumpur that deals mainlywith the Gulf.A check on U.N.'s food-for-oil website,http://www.un.org/Depts/oip/index.html, on Tuesday indicated 13shipments of vegetable ghee already underway to Iraq, 44 similar contractsapproved under a priority list and 86 awaiting voyage.But tonnages for contracts were not specified. In physical trade ofcrude palm oil (CPO), contracts forApril and May saw sale offers close at 1,485 ringgit a tonne -- down 25ringgit from Monday -- against bids at 1,475 in both the southern andcentral regions.Business was only reported at 1,500-1,480 in the south and 1,490-1,480in the central region.(US$1 = 3.8 ringgit) - Reuters