KUALA LUMPUR (April 07 2003) : The United Nations has asked suppliers tosend more than half a million tonnes of edible oils to Iraq as part of theoil-for-food programme for the war-hit country as fears over widespreadhunger grew, palm oil traders said.

The war, which has entered its third week, has disrupted food supply inIraq, where 60 percent of the people depended directly on the UN programmethat allowed proceeds from Iraq's oil sales to be used to buy food.

"We have been contacted by the UN to get ready. At least 300,000 tonnes ofedible oils and vegetable ghee have to reach Iraq in the next 45 days,"said one trader who deals with the Middle East.

"We learned that priority goods already on the high seas include bulk fooditems like wheat, milk powder, sugar and vegetable oils," he said.

Traders said 450,000 tonnes of palm-based vegetable ghee and 100,000tonnes of RBD palm oil were ready to enter Iraq, where concerns aregrowing about potential widespread hunger among its 26 million people as aresult of the US-led war launched on March 20.

US President George W. Bush accuses Iraq of hiding weapons of massdestruction, a charge that Iraq denies.

Bush said Iraqi forces were in their "final days" as explosions rockedBaghdad early on Sunday and US forces manoeuvred around the Iraqi capitalwaiting to move on the stronghold of President Saddam Hussein. Iraq vowedto fight on.

DEMAND BOOM: The UN World Food Programme (WFP) had issued the UN's largestemergency appeal, for $1.3 billion to buy mainly wheat flour, rice andcooking oils to avoid a disaster.

"The war has depressed the palm oil market for sometime. But don't peoplerealise there's a lot to expect from Iraq when the war is over? The demandis there," another trader said.

Iraq normally imports around 200,000 tonnes of vegetable ghee a month,said traders.

They said consumers in the Middle East were showing a healthy appetite forpalm oil even though freight rates had gone up to one-year highs.

Consumers in Egypt, Sudan, Yemen and Syria buy palm oil from mainproducers Malaysia and Indonesia.

"We have been shipping 95,500 tonnes of palm oil to the Middle East sincethe second half of March. Those guys are still buying oil," the secondtrader said.

Traders said palm oil remained the world's most favoured edible oilbecause it offered an attractive discount of $70 a tonne to arch rivalsoyaoil, adding that a steady demand would lend support to Malaysian crudepalm oil futures.

Malaysia's palm oil exports were expected to reach up to 375,000 tonnes inthe first 10 days of April compared with 355,514 tonnes in March 1-10.

At the close on Friday, the benchmark June contract fell 13 ringgit to1,452 ringgit ($382.11).

Some chartists said the market could rebound on Monday and test the 1,500ringgit key resistance. Key support was pegged at 1,400 ringgit.-Reuters