KUALA LUMPUR (March 19 2003) : Coconut oil prices may rise to an averageof $445 a tonne this year FOB Philippines, up nearly 20 percent from lastyear because of falling output from the world's largest producer, anindustry source said on Tuesday.

"Coconut trees are still recovering from the stress of over-production in2000 and 2001," Yvonne Agustin, executive director of the United CoconutAssociations of the Philippines (UCAP), told Reuters on the sidelines ofan edible oils conference.

"Premium of coconut oil over palm oil during the last two years appears tohave stabilised at around $37 a tonne although this has expanded againthis year to $50 a tonne," she said.

Agustin said production of copra, the dried coconut flesh from which oilis extracted, was expected to fall to 2.11 million tonnes in 2003 from2.31 million last year.

"The projection follows a cycle corresponding to the trees' make-up whichtakes at least two years to fully recover from stress of heavyproduction," she said.

Exports were projected to drop to 1.640 million tonnes in copra terms,below the previous year's 1.762 million, she added.

Coconut oil shipments were expected to slow this year to 900,000 tonnesfrom 944,662 previously, in line with coconut production prospects.

The Philippines exports coconut oil, which is used as cooking oil and inmaking aviation lubricants, cosmetics, detergent and soap, mostly toEurope and the United States.

Indonesia is the world's second largest coconut oil producer.- Reuters